Margin: The Journal of Applied Economic Research current issue

The Causal Relationships in Mean and Variance between Stock Returns and Foreign Institutional Investment in India

Inoue, T. — Mon, 16 Nov 2009 07:34:54 PST

This paper examines the causalities in mean and variance between stock returns and foreign institutional investment (FII) in India. The analysis in this paper applies the cross-correlation function approach from Cheung and Ng (1996), and uses daily data from January 1999 to March 2008 divided into two periods before and after May 2003. Empirical results showed that there are uni-directional causalities in mean and variance from stock returns to FII flows irrelevant of the sample periods, while the reverse causalities in mean and variance are only found in the period beginning with 2003. These results point to FII flows having exerted an impact on the movement of Indian stock prices during the more recent period.

Asymmetry in Information and Varying Rates of Interest: A Study of the Informal Credit Market in West Bengal

Bhattacharjee, M., Rajeev, M., Vani, B.P. — Mon, 16 Nov 2009 07:34:54 PST

This paper examines the nature and extent of household indebtedness in West Bengal, focusing on households’ access to credit and factors influencing interest rate determination in informal credit markets. As far as accessibility is concerned, it finds that the urban poor face greater problems than their rural counterparts in accessing formal and informal sources of credit. Using an ordered logit model it shows how information and monitoring opportunities play a critical role in arriving at a rate of interest for the lender.

Trends and Patterns of Foreign Direct Investments in Asia: A Comparative Perspective

Athukorala, P.-c. — Mon, 16 Nov 2009 07:34:54 PST

This paper examines foreign direct investment (FDI) in developing Asia over the past three decades with emphasis on two key issues: the implications of the ongoing process of international production fragmentation and the alleged ‘crowding out’ effect of China’s rise as a major host to FDI on the other countries in the region. The evidence suggests that assembly processes within vertically integrated global industries (in particular, electrical goods and electronics) has gained prominence over the past two decades as the major area of attraction for foreign investors in the region. Contrary to the popular crowding out fear, China’s rise as a major assembly centre within global production networks seems to have added further dynamism to region-wide multinational enterprise (MNE) operations in the regions. A key policy inference from our analysis is that, in designing policies of outward-oriented development, investment and trade policies must be considered together as co-determinants of the location of production and patterns of trade.

Fertiliser Use, Nutrient Imbalances and Subsidies: Trends and Implications

Chand, R., Pandey, L.M. — Mon, 16 Nov 2009 07:34:54 PST

Fertiliser use in India has seen higher growth rates than any other major agricultural input in the last four decades. There has recently been a serious slowdown in the growth of fertiliser use, primarily caused by supply-side constraints. The composition of fertiliser use has also resulted in serious imbalances in the use of major plant nutrients, which could cumulatively have a detrimental effect on soil health and crop productivity. The main cause of the imbalance is found in the price distortions resulting from the structure of fertiliser subsidies. The trend in the prices of agricultural products offers scope for reducing and rationalising fertiliser subsidies to boost fertiliser production and reduce nutritional imbalances.