Abstract
The main objective of this paper is to study the impact of India's financial developments on its economic growth for the period 1989 to 2011. The Indian financial development is reflected by developments in stock market and banking sector. The paper aims to study the impact of both financial sectors independently as well as combined impact. The stock market development indicators and banking sector development indicators along with macro-economic reform indicators and control variables are regressed over economy's growth rate. Developments in Indian stock market have a weak and bi-directional relationship with the nation's economic growth. The stock market development measures are highly correlated with the banking sector development indicators leading to a problem of multi-collinearity in the regression model.
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