IDEAS home Printed from https://ideas.repec.org/a/taf/oxdevs/v26y1998i2p153-169.html
   My bibliography  Save this article

Interest rates, saving and investment: Evidence from India

Author

Listed:
  • Prema-Chandra Athukorala

Abstract

The role of interest rates in the process of economic development is examined through an empirical inquiry into the interest rate-saving-investment nexus in the Indian economy during the period 1955-95. The results are generally in support of the financial liberalization school of thought. Higher real interest rates seem to promote both financial and total savings, and stimulate private investment. On the investment side, the combined salutary effect of interest rate increases operating through increased debt intermediation and self-financed capital accumulation outweighs the direct cost effect on investment. Overall, the study casts doubt on the robustness of results coming from the vast cross-country literature on the subject and calls for systematic time-series analyses covering a variety of country situations to inform the on-going policy debate.

Suggested Citation

  • Prema-Chandra Athukorala, 1998. "Interest rates, saving and investment: Evidence from India," Oxford Development Studies, Taylor & Francis Journals, vol. 26(2), pages 153-169.
    • Handle: RePEc:taf:oxdevs:v:26:y:1998:i:2:p:153-169
    DOI: 10.1080/13600819808424151
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/13600819808424151
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13600819808424151?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Adama Messanh COMBEY, 2016. "The Main Determinants of Private Investments in the WAEMU Zone: The Dynamic Approach," Journal of Economics and Political Economy, KSP Journals, vol. 3(4), pages 731-743, December.
    2. Bank for International Settlements, 2008. "Transmission mechanisms for monetary policy in emerging market economies," BIS Papers, Bank for International Settlements, number 35.
    3. Comlanvi Jude EGGOH, 2009. "Développement financier et croissance : Une synthèse des contributions pionnières," LEO Working Papers / DR LEO 442, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    4. Lateef Adewale Yunusa & Ibrahim A. Adekunle & Tolulope Oyakhilome Williams & Jamiu Adeniyi Akindele, 2021. "Dilemma Between Deposit And Lending Rate: Savings-Investment Perspective," Business & Management Compass, University of Economics Varna, issue 1, pages 65-85.
    5. Pradyumna Dash, 2016. "The Impact of Public Investment on Private Investment: Evidence from India," Vikalpa: The Journal for Decision Makers, , vol. 41(4), pages 288-307, December.
    6. Olatunji Abdul Shobande & Oladimeji Tomiwa Shodipe, 2019. "Mechanics Of Investment Drivers In Chinese Economy," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 23, pages 7-32, June.
    7. Hillary Chijindu Ezeaku & Imo Godwin Ibe & Uche Boniface Ugwuanyi & N. J. Modebe & Emmanuel Kalu Agbaeze, 2018. "Monetary Policy Transmission and Industrial Sector Growth: Empirical Evidence From Nigeria," SAGE Open, , vol. 8(2), pages 21582440187, April.
    8. Moyo, Clement & Le Roux, Pierre, 2018. "Interest rate reforms and economic growth: the savings and investment channel," MPRA Paper 85297, University Library of Munich, Germany.
    9. Mahraddika, Wishnu, 2019. "Does international reserve accumulation crowd out domestic private investment?," International Economics, Elsevier, vol. 158(C), pages 39-50.
    10. Saba Mushtaq & Danish Ahmed Siddiqui, 2016. "Effect of interest rate on economic performance: evidence from Islamic and non-Islamic economies," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 2(1), pages 1-14, December.
    11. Omar A Mendoza Lugo, 2008. "The differential impact of real interest rates and credit availability on private investment: evidence from Venezuela," BIS Papers chapters, in: Bank for International Settlements (ed.), Transmission mechanisms for monetary policy in emerging market economies, volume 35, pages 501-537, Bank for International Settlements.
    12. Lidiema, Caspah, 2017. "Effects of government borrowing on private investments in Kenya," KBA Centre for Research on Financial Markets and Policy Working Paper Series 22, Kenya Bankers Association (KBA).
    13. Wishnu Mahraddika, 2019. "Does international reserve accumulation crowd out domestic private investment?," Departmental Working Papers 2019-02, The Australian National University, Arndt-Corden Department of Economics.
    14. COMBEY, Adama, 2016. "The Main Determinants of Private Investment in The WAEMU Zone: The Dynamic Approach," MPRA Paper 75382, University Library of Munich, Germany.
    15. Felix Eschenbach, 2004. "Finance and Growth: A Survey of the Theoretical and Empirical Literature," Tinbergen Institute Discussion Papers 04-039/2, Tinbergen Institute.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:oxdevs:v:26:y:1998:i:2:p:153-169. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CODS20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.