Banerjee, Saumya S and Ghosh, Saibal (1998): Demand following and supply leading relationships: An empirical analysis for India. Published in: Indian Journal of Economics , Vol. 1, : pp. 67-82.
Download (64kB) | Preview
The study investigates the effects of activities of financial institutions (FIs). In particular, an econometric study has been undertaken to examine the ‘supply-leading’ and ‘demand-following’ characteristics of FI activities. The investigation is conducted by employing time series data using certain macro variables over the period 1962-63 to 1996-97. Our analysis shows the existence of a strong supply-leading (SL) relationship from real disbursements to real investments. The SL relation is further confirmed through the Sims causality tests. The demand-following (DF) relationship from real investments to real disbursements finds weak confirmation via the Sims causality test. Evidence therefore supports the presence of a strong SL link in the Indian context.
|Item Type:||MPRA Paper|
|Original Title:||Demand following and supply leading relationships: An empirical analysis for India|
|Keywords:||demand following; supply leading; India|
|Subjects:||G - Financial Economics > G2 - Financial Institutions and Services > G20 - General|
|Depositing User:||Saibal Ghosh|
|Date Deposited:||02. May 2010 23:51|
|Last Modified:||12. Feb 2013 12:04|
Bhatt V. V (1993) Development Banks as Catalyst for Industrial Development, International Journal of Development Banking, 11, 47-61
Fry, M. J (1995) Money, Interest and Banking in Economic Development, London: The Johns Hopkins University Press.
Dickey, D. A and W. A. Fuller (1979) Distributions of the Estimators for Autoregressive Time Series with a Unit Root, Journal of the American Statistical Association, 74, 427-31
Granger, C. W. J (1969) Investigating Causal Relationships by Econometric Models and Cross-Spectral Models, Econometrica, 37, 24-36
Jung, W. S (1986) Financial Development and Economic Growth: International Evidence, Economic Development and Cultural Change, 34, 333-346.
Lucas, R (1988) On the Mechanics of Economic Development, Journal of Monetary Economics, 22, 3-42.
McKinnon, R, I (1973) Money and Capital in Economic Development, Washington D. C: The Brookings Institution.
Murinde, V and F. S H. Eng (1994) Financial Development and Economic Growth in Singapore: Demand-Following or Supply Leading?, Applied Financial Economics, 4, 391-404.
Odedokun, M.O (1992) Some tests of Fungibility in the use of Development Financial Institutions Credits in LDCs::Cross Sectional Results, International Journal of Development Banking, 10, 85-94.
Odedokun, M.O (1996a) International Evidence on the Effects of Directed Credit Programmes on the Efficiency of Resource Allocation in Developing Countries: The Case of Development Bank Lendings, Journal of Development Economics, 48, 449-460.
Odedokun, M.O (1996b) in N.Hermes and R.Lensink (ed.) Financial Development and Economic Growth: Theory and Experience from Developing Countries, London, Routledge.
Patrick, H (1966) Financial and Economic Growth in Underdeveloped Countries, Economic Development and Cultural Change, 14, 174-189.
Reserve Bank of India (1999) Harmonising the Role and Operations of Development Financial Institutions and Banks: A Discussion Paper, Mumbai.
Roemer, P (1989) Capital Accumulation and the Theory of Long-Run Growth, in R. Barro (ed.) Modern Business Cycle Theory, Harvard University Press, Cambridge, MA.
Shaw, E S (1973) Financial Deepening in Economic Development, New York, Oxford University Press.
Sims C. A (1972) Money. Income and Causality, American Economic Review, 62, 540-552.
Taylor, L (1990) Socially Relevant Policy Analysis: Cambridge, The MIT Press.
Wang, P and C. K. Yip (1992) Examining the Long-Run Effects of Money on Economic Growth, Journal of Macroeconomics, 14, 359-369.