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Financial Liberalisation

Author

Listed:
  • K.V. Bhanu Murthy

    (Department of Commerce, Delhi School of Economics, Delhi University. E-mail: bhanumurthykv@yahoo.com)

  • Sonia Goel

    (Department of Economics, Ramjas College, Delhi University.)

Abstract

Short-run market integration cannot be subsumed within the long run, since the money market is essentially for enabling the liquidity needs, through short term credit instruments. Through Ravallion (1986) tests we have examined short-run market integration of Money Market in India, including testing for the ‘central market hypothesis’. We find that the sub-markets are not segmented. Therefore, it can be expected that information flows lead to price adjustments across sub-markets of the money market. Second, arbitrage possibilities do not exist. On the whole we conclude that the money market in India displays short-run market integration.

Suggested Citation

  • K.V. Bhanu Murthy & Sonia Goel, 2011. "Financial Liberalisation," Review of Market Integration, India Development Foundation, vol. 3(2), pages 181-223, August.
    • Handle: RePEc:sae:revmar:v:3:y:2011:i:2:p:181-223
    DOI: 10.1177/097492921100300204
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    References listed on IDEAS

    as
    1. Martin Ravallion, 1986. "Testing Market Integration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(1), pages 102-109.
    2. Peter L. Bernstein, 1998. "Stock Market Risk in a Post Keynesian World," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 21(1), pages 15-24, September.
    3. Adler, Michael & Dumas, Bernard, 1983. "International Portfolio Choice and Corporation Finance: A Synthesis," Journal of Finance, American Finance Association, vol. 38(3), pages 925-984, June.
    4. Blyn, George, 1973. "Price Series Correlation as a Measure of Market Integration," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 28(2), April.
    Full references (including those not matched with items on IDEAS)

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