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Measuring financial development in India: A PCA approach

Author

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  • Sanjaya Kumar LENKA

    (School of Humanities and Social Sciences, Indian Institute of Technology Indore, Madhya Pradesh, India)

Abstract

Financial development is a multidimensional concept and its measurement is thorny for the researchers. A good measurement of financial development is decisive in evaluating the progress of financial sector development and understanding the corresponding impact on economic growth and poverty reduction. The study makes use of the PCA (Principal components analysis) to construct a financial depth index (IFD) that serves as a proxy variable of financial development position of the country. This paper used Indian time series data covering a period from 1980 to 2011(Index-1) and 1990-2011(Index-2) for measurement of two separate financial development index. This study gives insight for understanding various financial sector proxies as well as to enhance the knowledge of financial position of the country. The proposed index is easy to compute and comparable across countries.

Suggested Citation

  • Sanjaya Kumar LENKA, 2015. "Measuring financial development in India: A PCA approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(602), S), pages 205-216, Spring.
    • Handle: RePEc:agr:journl:v:xxii:y:2015:i:1(602):p:205-216
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    Citations

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    Cited by:

    1. Sanjaya Kumar LENKA, 2015. "Does Financial Development Influence Economic Growth in India?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(605), W), pages 159-170, Winter.
    2. repec:agr:journl:v:4(605):y:2015:i:4(605):p:159-170 is not listed on IDEAS
    3. Daniel Sakyi & Micheal Kofi Boachie & Mustapha Immurana, 2016. "Does Financial Development Drive Private Investment in Ghana?," Economies, MDPI, vol. 4(4), pages 1-12, December.
    4. Gulshan Kumar & Shallu Batra, 2023. "Interrelationship Between Human Development, Financial Development and Economic Growth: Empirical Evidences from Indian Economy," Indian Journal of Human Development, , vol. 17(1), pages 60-81, April.

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