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Moore, Tomoe, Green, Christopher J. and Murinde, Victor (2005) 'Portfolio Behaviour in a Flow of Funds Model for the Household Sector in India.' Journal of Development Studies, 41 (4). pp. 675-702.

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Abstract

We estimate a flow of funds model for the household sector in India, within the Almost Ideal Demand System (AIDS) framework, and examine the demand for money and the substitution effects between money and other financial assets. The restricted long-run model, obtained using cointegration techniques, provides stable equilibrium relationship between I(1) variables and broadly satisfies the axioms of rational choice in consumer demand theory. We find that financial sector reform exerts a significant impact on the interest rate structure and household portfolio preferences; specifically, there is strong substitutability among risk-free assets and a possible speculative effect in the stock market, while the exchange rate strongly influences the demand for money. These findings all have important policy implications.

Item Type: Journal Article
SOAS Departments & Centres: Legacy Departments > Faculty of Law and Social Sciences > School of Finance and Management
ISSN: 00220388
DOI (Digital Object Identifier): https://doi.org/10.1080/00220380500092846
Date Deposited: 21 May 2017 16:59
URI: https://eprints.soas.ac.uk/id/eprint/23939

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