ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Financial Sector ReformsSubscribe to Financial Sector Reforms

Stock Market in a Liberalised Economy

Considerable debate rages about the impact of deregulation on the efficiency of the market. Free market advocates all too often tend to undermine the unruly behaviour of stock markets in the post liberalisation scenario. On the other hand, opponents believe that stock market reforms may lead to over-speculation, financial crisis and even a misallocation of resources at the cost of real sector growth and stability, as has been seen in the case of India. However, there is now an increasing recognition in LDCs that given the competition for foreign funding and limited availability of domestic finance, the equity market can play a beneficial role in providing capital to the productive sector as well as facilitate the process of privatisation.

Central Banking and Public Policy-Making

Lectures on Economic and Financial Sector Reforms in India by Y V Reddy; Oxford University Press, New Delhi, 2002, pp 236, Rs 550.

Stock Market Development in India

This paper addresses an important question of what happened to the Indian stock market following financial liberalisation. Considering three stock market indicators, viz, size, liquidity and volatility, and applying two time series trend break techniques of Perron on monthly data of Bombay Stock Exchange, it has been found that the Indian stock market grew and became more liquid after liberalisation. However, in respect of volatility the market had not exhibited any significant changes.

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