Flow of funds and the impact of financial controls on bank portfolio behaviour: a study of India

Tomoe Moore and Christopher Green

The European Journal of Finance, 2008, vol. 14, issue 7, 641-661

Abstract: This paper studies the flow of funds and portfolio behaviour of Indian banks from 1951 to 1994. In this period, financial controls such as variable reserve ratios were important constraints on bank behaviour, especially before liberalization took place in the early 1990s. We estimate a system of demand functions which uses as framework the Almost Ideal Demand System and which incorporates the reserve ratio regulations. Attention is paid to cointegration and to structural breaks. The estimated model provides coherent and plausible parameter estimates for prices and other variables. We find that a standard portfolio model can usefully be applied to the study of financial behaviour in a developing economy such as India, and some interesting policy implications can be drawn.

Keywords: flow of funds; India; banking system; AIDS model (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/13518470801890800 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:eurjfi:v:14:y:2008:i:7:p:641-661

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/REJF20

DOI: 10.1080/13518470801890800

Access Statistics for this article

The European Journal of Finance is currently edited by Chris Adcock

More articles in The European Journal of Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().