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The Differential Effects of Financial Development on India's Industrial Performance

Gupta, Nitin

Description

The paper aims to investigate the differential impact of increased financial development on industrial output, across state and industry categories. Using an unbalanced panel of 15 Indian states, 22 industries at the 2-digit level, and an 11-year period spanning 1992- 2002, the paper�s most novel contribution comes from hypothesising and testing for operating channels though which increased financial depth benefits output. It is concluded that financial depth facilitates increased use of...[Show more]

dc.contributor.authorGupta, Nitin
dc.coverage.spatialCanberra Australia
dc.date.accessioned2015-12-10T22:38:37Z
dc.date.createdJuly 11-14 2011
dc.identifier.urihttp://hdl.handle.net/1885/56813
dc.description.abstractThe paper aims to investigate the differential impact of increased financial development on industrial output, across state and industry categories. Using an unbalanced panel of 15 Indian states, 22 industries at the 2-digit level, and an 11-year period spanning 1992- 2002, the paper�s most novel contribution comes from hypothesising and testing for operating channels though which increased financial depth benefits output. It is concluded that financial depth facilitates increased use of contract labour by industries, which in turn mitigates the effects of industrial disputes and increases output. This beneficial impact is uniformly felt across the country, regardless of state-level labour regulations. However, financial depth has failed to directly benefit industries with the greatest need for external financing. Overall, industries benefited through the indirect operating channel of contract labour use, but did not gain anything through the direct operating channel of alleviating financing constraints. The negative effects of the latter outweigh the positive effects of the former, and help explain the sharp deceleration of growth in industries with moderate and high dependence on external finance. Finally, the paper makes the dual case for comprehensive labour reforms and for policies to improve quality of intermediation in Indian financial markets.
dc.publisherEconomic Society of Australia
dc.relation.ispartofseriesAustralian Conference of Economists 2011
dc.sourceProceedings of Australian Conference of Economists 2011
dc.titleThe Differential Effects of Financial Development on India's Industrial Performance
dc.typeConference paper
local.description.notesImported from ARIES
local.description.refereedNo
dc.date.issued2011
local.identifier.absfor140202 - Economic Development and Growth
local.identifier.ariespublicationu4002919xPUB376
local.type.statusPublished Version
local.contributor.affiliationGupta, Nitin, College of Asia and the Pacific, ANU
local.description.embargo2037-12-31
local.bibliographicCitation.startpage1
local.bibliographicCitation.lastpage62
dc.date.updated2020-12-20T07:28:38Z
CollectionsANU Research Publications

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