Stability In India Research Articles

A study on the evolution of financial inclusion and financial stability in India based on the previous research works: A review paper

The study examines the relationship between financial stability and inclusion in the context of two significant economic shocks to India: the demonetization and the COVID-19 outbreak. The first section of the paper discusses the rise of financial inclusion and its importance in a country where a sizable percentage of the population lives in rural areas. Ensuring access to formal banking and financial services, or financial inclusion, is essential for reducing poverty, creating jobs, and fostering economic progress. Financial inclusion and financial stability are strongly related. Financial stability is the capacity to endure unanticipated financial shocks. This study centers on the effects of demonetization in 2016, which caused a cash crunch and made people rethink financial inclusion programs, which hastened their implementation. Similar to this, lockdown measures during the COVID-19 pandemic forced a move towards digital financial inclusion, which increased the appeal of online financial services. The necessity of stability and financial inclusion for sustainable growth in a large country like India is emphasized in the conclusion. Ensuring that everyone, particularly those from low-income backgrounds, has access to financial services promotes social cohesion and a strong economy. In the end, inclusive practices' financial stability promotes national progress.

Revisiting fiscal deficit sustainability and revenue-expenditure nexus in India

The COVID-19 epidemic has brought to the emergence of fiscal sustainability as an exceptionally challenging issue for both emerging and advanced economies. In this context, it is imperative to assess the sustainability of fiscal deficit in India for the Central and State level for the period 1970–71 to 2021–2022 and 1973–74 to 2021–22, respectively. Furthermore, the study also seeks to establish the cause-and-effect relationship between government expenditure and revenue. The application of Gregory-Hansen cointegration test supports sustainability of fiscal deficits for Central and State governments individually. Additionally, the ARDL model for cointegration indicates that both governments exhibit "weak" sustainability of the fiscal deficit. Finally, the Toda-Yamamoto Granger non-causality test provides evidence in favour of the "spend-tax hypothesis" for both governments. In this backdrop, the present study posits that it is essential for governments to implement fiscal consolidation and prudent fiscal policies in order to reduce the magnitude of the budget deficit, optimise the execution of monetary and exchange rate policies, and foster development driven by the private sector. This approach is crucial to ensure long-term fiscal sustainability and economic stability in India, especially aftermath of the COVID-19 pandemic.

Assessing the Impact of Sustainable Finance on Economic Growth: Evidence from India, the UAE, and Oman

The influence of sustainable finance on foreign direct investment (FDI), economic development, financial market stability, and economic stability in India, the United Arab Emirates, and Oman is investigated in this paper using a quantitative methodology. The study intends to evaluate the impact of sustainable finance on these factors via the use of standardized questionnaires that are distributed among participants in the financial industry. Structural Equation Modeling (SEM) using SPSS and AMOS was used for the investigation, which shows a favorable relationship between sustainable financing and both FDI inflows and economic development. The results show that the model fits the impacts of FDI well (CFI=0.973, RMSEA=0.069) and the effects of economic growth somewhat (CFI=0.946, RMSEA=0.102). Sustainable finance and economic growth are considerably mediated by financial market stability, while the connection between sustainable finance and foreign direct investment (FDI) is significantly moderated by economic stability (interaction path estimate = 0.075, p = 0.035). In order to maximize the advantages of sustainable finance on investment and growth outcomes, the research emphasizes the critical role that financial and economic stability plays.

Global resurgence: private asset reconstruction companies as legal catalysts for financial stability in India and beyond

Purpose This study aims to transcend geographical boundaries and provide insights into innovative strategies used by Indian Asset Reconstruction Companies (ARCs) in managing distressed assets. The study examines the origins, evolution, challenges and opportunities faced by ARCs to derive lessons that can be universally applicable and serve as a valuable blueprint for global investors and institutions seeking effective strategies in managing distressed assets. From a legal and compliance angle, this opens up many perspectives that would help plug loopholes and grey zones within the legal ambit for organisations and institutions. Design/methodology/approach The study invokes a critical review of existing literature, news, discussions and publicly available information from reliable sources such as the central bank’s websites to develop the viewpoints and provide recommendations. Findings ARCs face challenges, recovering only 19.15% of distressed assets in 2022. Despite constraints like funding, governance issues and regulatory hurdles, there is a substantial opportunity for investors in the Rs. 9.6 lakh crore non-performing assets. The study suggests strategic assessments by banks, emphasises ARCs’ roles in specific sectors and calls for regulatory adjustments. With diverse investors and favourable regulations, this evolving landscape offers significant global opportunities for policymakers and investors in distressed assets. Practical implications This study serves as a valuable guide for shaping resilient policies, fostering cross-border collaborations and optimising distressed asset management strategies on a global scale. Originality/value This study breaks new ground by examining the private ARCs sector within an emerging economy’s dynamics, presenting insights relevant to global distressed markets. This study serves as a unique resource for those navigating the complexities of distressed markets globally, providing insights that can inform strategies, policies and academic discussions in the broader financial landscape.

Determinants of banking stability in India

Purpose This study aims to examine the various internal and external factors affecting the financial stability of Indian Commercial Banks. The aim is to improve the effectiveness of the Indian banking system in facilitating the transmission of monetary policy and to strengthen its resilience in the event of a banking crisis. Design/methodology/approach A panel data regression analysis is employed on unbalanced panel data of Indian commercial banks including public sector, private sector and foreign sector banks for the period of 2005–2022. Findings This study revealed that Indian banks with higher profits and high capitalization are more stable than others. However, banks with large bank size and high management costs are less stable as compared to other banks. In the case of macroeconomic variables, foreign exchange reserves have a significant positive impact on banking stability. Moreover, the unemployment rate has a significant negative impact on the banking stability of India. Research limitations/implications Research identifies relevant micro and macroeconomic drivers pertaining to India’s banking stability, a developing economy. These findings have significant implications and can attract the attention of analysts, regulators, bankers and academicians in this area. Nevertheless, the scope of the study is limited to the variables chosen to evaluate their contribution to banking stability, but other variables may influence Indian banking conditions. Practical implications Indian banks are advised by the research to place a high priority on profitability, capitalization and effective risk management. Customers and investors should choose banks with strong metrics. The priorities for policymakers should be preserving robust reserves and tackling unemployment with focused initiatives. Adopting digitalization can improve banks’ customer service and operational effectiveness, which is important for overcoming economic obstacles. These tactics provide doable measures to improve the resilience and stability of the banking industry in India and other emerging nations. Originality/value This research differentiates from the rest by focusing solely on the Indian banking system, in contrast to previous ones that often treated India as part of a bigger part like the BRICS or South Asia continent. It acknowledges the need to comprehending the unique traits and difficulties faced by the Indian banking system. Moreover, the current study distinguishes itself by focusing on the combined impact of microeconomic and macroeconomic indicators in the Indian context, unlike earlier research that concentrated on assessing the effects of individual variables. The current study also investigated new variables like corporate governance and foreign exchange reserves in the context of Indian banking which have not been explored by existing literature. Research is also crucial in the context of the analysis’s time frame, since it captures the period of economic transformation that included demonization, implementation of GST, major mergers and global COVID-19 pandemic.

Regulatory Framework of P2P Lending in India: Market Stability and Financial Inclusion Implications

Peer-to-peer (P2P) lending has revolutionized the financial industry by offering an alternative to conventional banking. It facilitates direct connections between lenders and borrowers via online platforms. This research paper examines the regulatory framework governing P2P lending in India, introduced by the Reserve Bank of India (RBI) in 2017, and its implications for market stability and financial inclusion. The study highlights the benefits of P2P lending, including greater acceptance, regional inclusivity, reduced costs, and faster loan approvals. It also explores the challenges posed by regulatory measures, such as caps on lending and borrowing, compliance costs, and operational hurdles, which can limit the impact on financial inclusion. The role of transparency in borrower information is analyzed, demonstrating how it influences loan interest rates, reduces adverse selection, and facilitates the formation of borrower groups based on credit ratings and social capital. Despite the significant benefits of enhanced transparency and regulatory oversight, the paper identifies ongoing challenges, including privacy concerns and information asymmetry. The findings underscore the need for continued regulatory refinement and collaboration among stakeholders to fully leverage the benefits of P2P lending in promoting financial inclusion and market stability in India. By addressing these challenges, P2P lending platforms can more effectively meet the credit needs of underserved populations, thereby contributing to a more inclusive financial system.

Navigating the Regulatory Landscape: A Comprehensive Analysis of Banking Law and Financial Stability in India

Navigating the Regulatory Landscape: A Comprehensive Analysis of Banking Law and Financial Stability in India

Exploring Financial Literacy: A Study of Socioeconomic Factors

This research project examines the relationship between socioeconomic factors and financial literacy among individuals in India. The study utilizes primary data collected through structured questionnaires from a diverse sample of respondents engaged in personal finance management. Descriptive analysis reveals that the average age of respondents is 24.4 years, with a wide range of income levels ranging from ₹0 to ₹200,000. Inferential analysis, including correlation and regression, indicates a significant positive correlation between income levels and financial literacy ratings. Furthermore, younger individuals and those with higher education and income levels exhibit better financial literacy. Based on these findings, the study recommends targeted financial education programs, early financial literacy initiatives, income-related interventions, and continuous learning opportunities to enhance financial literacy and promote economic stability in India. This research contributes to the understanding of the determinants of financial literacy and provides insights for policymakers, educators, and financial institutions to develop effective strategies for improving financial well-being in the Indian context.

Money demand stability in India: allowing for an unknown number of breaks

Money demand stability in India: allowing for an unknown number of breaks

Effects of economic reform on fiscal stability in India

Effects of economic reform on fiscal stability in India

Digital Financial Inclusion and Bank Competition - An Impact on Bank Stability in India

Digital Financial Inclusion and Bank Competition - An Impact on Bank Stability in India

Deforestation and Judicial intervention in India

Judiciary in India has played a vigorous role in addressing the concern of deforestation in India. Supreme Court’s ruling is an important step in helping to reduce the rate of deforestation in India, and to protect the forests that remain.
 The concepts of industrialization, urbanization and globalization have negatively prejudiced the natural assets like water, woods, air, etc. Since these resources are essential to human growth, there is an urgent need to protect and use them in a sustainable way. Indeed, forests are a crucial component of our natural ecology. They contribute to preserving ecological equilibrium. They protect the tribal populace, protect gene pools, and shelter wild animals. A successful governance model must strike a balance between development and conservation.
 Through court rulings, administrative decisions, and legislative measures, India has ensured the preservation of her forests. Though a lot of legislative measures have been made for the maintenance of forests in India, but the input of the judiciary in this regard is beyond compare. Finding means for the Indian government to encourage the preservation of the country's woods is crucial for both the future of the forests and the stability of India. Indian woods may decline as a result of the country's expanding population and associated demands for resources and consumption. Any large decline would result in increasing resource scarcity, which would put more pressure on the government.

How justified is abandoning money from monetary policy? Evidence from dynamically simulated ARDL

The stable money demand function is a crucial policy tool of the monetary policy of any central bank, which links the monetary sector of an economy to its real sector. Notably, after the global financial crisis of 2007–08, the role of money has come to be envisaged as an essential issue while formulating and conducting the monetary policy, especially at zero lower bound. It is crucial to know whether money demand is stable for inferring a sound monetary policy. To this end, the present study examines the short- and long-run money demand relationship and its stability in India from 2006:Q3 to 2019:Q4. The study has employed a dynamically simulated autoregressive distributed lag (ARDL) cointegration approach, which shows a well-specified and stable money demand in India after incorporating the inflation forecast variable as one of the essential determinants along with other covariates. Furthermore, the dynamically simulated impulse response also supports the economic relationship among variables. The current finding of stable money demand implies a policy implication in terms of focusing on monetary aggregate, in the ongoing flexible inflation targeting framework, as one of the essential information or indicator variables, which acts as a long-term assessment of short-term interest rate setting behaviour to achieve the macroeconomic goals.

Impact of gst on price stability in India by adding some quantitative data too.

Impact of gst on price stability in India by adding some quantitative data too.

The impact of diversification on bank stability in India

The impact of diversification on bank stability in India

India’s ‘neighbourhood first’ policy: the primacy of geoeconomics

ABSTRACT In India’s foreign policy, its neighbourhood constitutes the core. It is entwined with the security and stability of India’s periphery which is homeland to diverse ethnic groups with familial ties and their socio-cultural affinities that often criss-cross borders. Such connections were ruptured by the 1947 partition of the subcontinent. The majoritarian conception of nation building of the post-colonial states detested shared socio-cultural commonality and emphasised ‘exclusivity’ of national identity which only sharpened the rupture caused by partition. This attitude degenerated into a mindset characterised by mistrust and suspicion and which prevented co-operation that could have optimised the economic potential of the region. India’s over-emphasis on its security linkages with its neighbours made it extra-vigilant to the domestic politics and foreign policy of its South Asian neighbours. Neighbours felt that such vigilance impeded their sovereign foreign policy choices and constrained them in shaping their internal politics. As a result, neighbours resented India. India’s neighbourhood policy, however, has undergone several shifts – it is slowly moving away from an overt security-centric approach to forging development partnerships with its neighbours as a means to ensure security.

Nexus between inflation and fiscal deficit: a comparative study of India and China

PurposeThe purpose of this paper is to examine the deficit–inflation nexus in the two fastest growing economies, India and China, which happen to be crucial affiliates of the global growth generator countries apart from their association in Brazil, Russia, India, China, and South Africa.Design/methodology/approachThe paper uses the prism of the vector auto regression framework, for the period 1985–1986 to 2016–2017 for both India and China. For this purpose, gross fiscal deficit, money supply, exchange rate, crude oil prices and output gap are examined as the key elements in the determination of inflation. The econometric framework used chiefly comprises of cointegration analysis, vector error correction model, Granger causality and impulse response functions.FindingsThe findings of this paper support the hypothesis that fiscal deficits are inflationary only in the Indian context and that the Ricardian equivalence cannot be negated for China at least in the short run. The results presented in the paper are a little agnostic about whether New Keynesian Phillips Curve (NKPC) explains the inflation dynamics in India, given that both inflation inertia and output gap are not robust. However, for the Chinese economy, NKPC along with structural theory is instrumental in describing trends pertaining to inflation during the period of the study.Practical ImplicationsThe paper warrants broader policy framework to aim at addressing structural bottlenecks to ensure non-inflationary growth keeping in mind the structural views on inflation. Furthermore, the paper fosters greater synthesis between monetary and fiscal policies, especially considering the global economic disruptions the world economy is subject to.Originality/valueConsidering there are only a limited number of studies on fiscal deficit of China, the present paper is of paramount significance in terms of growing concern over the sustainability of the growth process in China. Additionally, the paper is first-of-its-kind attempt to account the effectiveness of a healthy monetary–fiscal interface in achieving macroeconomic stability in India and China.

Does regulatory under‐compliance with governance standards lead to bank instability? An exploration using Indian data

AbstractThe paper looks at whether under‐compliance with governance standards leads to bank instability. The empirical analysis is executed using a novel and unique panel dataset on the governance of Indian banks from 2009 to 2018. The study gauges the governance compliance on 48 norms, covering six key dimensions of corporate governance: board effectiveness, audit function, risk management, remuneration, shareholder rights and information, and disclosure and transparency. A measure of bank stability is obtained using 14 important financial ratio indicators, encompassing five critical dimensions of stability: soundness, asset quality, profitability, management efficiency and liquidity. The composite indices for both governance compliance and bank stability are constructed using the innovative non‐parametric constrained “Benefit‐of‐the‐Doubt (BoD)” approach. The governance compliance‐stability nexus is tested econometrically using the panel ordered probit regression. Empirical results are found to be robust and suggest that governance compliance emphatically explains bank stability in India. The most significant policy implication, which emerges from the empirical findings, is that any sort of regulatory under‐compliance with selected governance norms by banks would be costly and may have a destabilising effect on the banking system.

Does oil price aggravate the impact of economic policy uncertainty on bank performance in India?

This paper examines the relationship between Economic Policy Uncertainty (EPU) and bank performance in India over the period 2000–2016. We investigate the role of international crude oil price in this relationship that previous studies have ignored. We also investigate whether the effect of oil prices depends on inflationary conditions. Using a sample of Indian commercial banks from 2000 to 2016, we find that an increase in the Indian EPU is associated with increased risk-taking (insolvency, credit and liquidity risks), but improved cost management efficiency and profitability. The EPU and risk-taking relationships are aggravated by higher international oil prices. These effects of oil prices are not conditional on the inflation level in India. The results are robust to alternative Indian EPU calculations and estimation methods. We also investigate the role of international oil prices in the spillover of the US EPU to Indian banks' performance. We find that the US EPU affects Indian banks' credit risk, cost efficiency and profitability in the same sign as the Indian EPU, but the two latter effects are amplified by oil price rises, and the amplification effects are conditional on Indian inflation. The findings have important implications for policies for financial reform and financial stability in India.

Viral V. Acharya: Quest for restoring financial stability in India

Viral V. Acharya: Quest for restoring financial stability in India