Advances in Finance & Applied Economics (eBook)

N.R. Bhanumurthy is currently a Professor at the National Institute of Public Finance and Policy (NIPFP), New Delhi, India. Prior to joining the NIPFP, he worked as Assistant and Associate Professor at the Institute of Economic Growth (IEG), Delhi. He has worked as a macroeconomist at UNESCAP, Bangkok and the UNDP Regional Centre for the Asia-Pacific region, Colombo. He has been a Visiting Fellow at the Maison des sciences de l’homme, Paris, France, and at McGill University, Montreal, Canada. He has also been a consultant to the ILO, the World Bank, and the Asian Development Bank. Currently, he is Secretary of the Indian Econometric Society and a Managing Trustee of the Indian Economic Association Trust for Research and Development.   K. Shanmugan is currently working as an Associate Professor at the M. S. University of Baroda, India. He is also the Treasurer of the Indian Econometric Society (TIES), New Delhi. He has chaired numerous conferences and seminars organized by some of the most prestigious institutions in India and has 27 years teaching experience.  Shriram Nerlekar is a faculty of Finance at the Savitribai Phule Pune University (SPPU), India. He is currently serving as Director, Institute of Management Education Research and Training (IMERT), Pune. He has chaired numerous academic and administrative committees formed by SPPU. He is the recipient of the ‘Best Professor in Financial Management Award’ (awarded in 2010 by Mumbai-based Business School Affaire’s Dewang Mehta Business School Awards) and of the ‘Young Achiever Award’ (awarded in 2012 by Mumbai-based World Education Congress).  Sandeep Hegade is the Founder Director of the Centre for Advanced Studies in Policy Research, Pune. He is the Editor-in-Chief of IMERT’s journal Arthkalp – Journal of Finance & Economics. He is the recipient of the National Research Fellowship – BANRF (Dr. Babasaheb Ambedkar National Research Fellowships) at BARTI (Dr. Babasaheb Ambedkar Research & Training Institute), Pune. He is a researcher, author and blogger on various topics related to finance and economics. 

Contents 5
About the Editors 7
Development Economics 8
Federalism in India: An Economic Analysis 9
1 Introduction and Literature Review 9
2 Institutional Background 11
3 Data 12
4 Results 14
4.1 Governance 15
4.2 Economic Outcomes 16
5 Further Work 17
References 23
Econometric Analysis of Growth Inclusiveness in India: Evidence from Cross-Sectional Data 24
1 Review of the Literature 26
1.1 The Pre-Washington Consensus (PWC) 26
1.2 The Washington Consensus (WC) 26
1.3 Sustainable Development 27
1.4 Human Development 27
1.5 The Post-Washington Consensus (Post-WC) 28
1.6 The Pro-poor Growth (PPG) 28
1.7 Millennium Development Goals (MDGs) 29
1.8 Inclusive Growth 29
2 Methodology 30
2.1 Framework of Analysis 30
2.2 Estimation Procedure and the Predictive Role of Independent Variables 31
2.3 Data Sets and Data Sources: 32
2.4 Variables and Their Notations 34
2.5 Model Specifications Six Models Have Been Framed as Given Below, Both for 2001 and 2011 35
3 Results and Discussion 35
3.1 Evaluating the Regression Models 35
3.2 Economic Dimension—2001 and 2011 36
3.3 Amenities Dimension—2001 and 2011 37
3.4 Human Development Dimension—2001 and 2011 39
3.5 Gender Equity and Financial Inclusion Dimension—2001 and 2011 39
3.6 Sustainability Dimension—2001 and 2011 39
3.7 Governance Dimension—2001 and 2011 40
4 Concluding Observations 40
References 42
Environmental Economics 44
Assessing an Investor’s Decision to Invest in Solar Power Across Indian States 45
1 Introduction 45
1.1 Overview of Energy Sector 45
1.2 Indian Perspective 47
2 Literature Review 47
3 Methodology 50
3.1 Costs 51
3.2 Solar Policies 52
3.3 Corruption 52
3.4 Final Rankings 53
4 Result and Analysis 53
4.1 Cost 53
4.2 Solar Policies 55
4.3 Corruption 58
5 Conclusion, Limitations, and Further Scope 60
Appendix 61
References 65
Urban Sprawl and Transport Sustainability on Highway Corridors Using Stake Holder Analysis 67
1 Development Bank 68
2 Conclusion 74
References 75
Policy Interventions for Sustainable Solid Waste Management in Developing Countries 76
1 Introduction 77
2 Categorising Solid Wastes 78
3 Theories and Concepts Related to Waste Management 79
3.1 Theories 79
3.2 Concepts and Approaches 80
4 Current Waste Management Practices 82
5 Instruments of Waste Management 85
6 Use of Policy Instruments for Solid Waste Management 88
7 Summary and Conclusion 90
References 91
Monetary Economics 93
MUDRA: The Transformation of Microfinance in India: Review, Experiences and Future Prospect 94
1 Introduction 95
2 Microfinance 95
2.1 Concept 95
2.2 Requirement 96
2.3 Origin 96
2.4 Function 97
2.5 Growth of Microfinance in India 98
3 Objective 99
4 Methodology and Data Sources 99
5 Major Findings 100
5.1 Progress 100
5.2 Region-Wise Performance by Banks (Number of Accounts) 101
5.3 Region-Wise Performance by Banks (Amount Disbursed) 102
6 Conclusion 102
References 104
Impact of Fiscal Policy Initiatives on Inflation in India 106
1 Introduction 106
2 Impact of Government Expenditure on Inflation 109
3 Models and Data 112
4 Empirical Analysis 114
5 Conclusion 117
References 118
Monetary Policy and Private Investment in India: The MIDAS Experience 120
1 Introduction 121
2 Methodology 122
2.1 Quarterly VAR Model 123
2.2 Mixed-Frequency VAR 123
3 Data 125
3.1 Descriptive Data Analysis 125
4 Empirical Results 128
4.1 Quarterly VAR 129
4.2 Mixed-Frequency VAR 129
5 Conclusion 130
References 131
Public Economics 133
Incidence of Specific or Employment Tax in Non-Walrasian Fixed Price Model with Efficiency Wage 134
1 Introduction 134
2 The Basic Model 136
2.1 The Firm 136
2.2 The Household 143
2.3 The Government 146
3 Regime Classification 146
4 Regime with Commodity Demand Constraint (RWDC) 147
4.1 Incidence of Specific Tax in RWDC 149
5 Conclusion 154
Appendix 155
References 157
Married Women’s Education Levels and Agency Outside the Home: Evidence from Rural India 159
1 Introduction 159
2 Agency and Education 161
3 Data and Variables 162
3.1 Outcome Variables 163
3.2 Explanatory Variables 163
4 Empirical Strategy 164
5 Results 165
5.1 Descriptive Statistics 165
5.2 Regression Results 168
5.3 Discussion 169
6 Conclusion 169
References 170
Behavioral Economics 172
Mental Accounting—Saving with Virtual Shoeboxes 173
1 Introduction 173
2 The Experiment 174
3 Findings 175
4 Limitations 179
5 Conclusion 179
References 180
Trading Behaviour of Investor Categories and Its Impact on Indian Equity Market 181
1 Introduction 182
2 Brief Survey of Literature 183
2.1 Trade Volume, Return and Volatility 183
2.2 Trading Behaviour of Categories of Investors 184
3 Data and Methodology 185
4 Empirical Results and Discussion 185
4.1 Identification of Common Characteristics Across Investor Categories 185
4.2 Common Characteristics of Investor Categories Trading and Economic Fundamentals 187
4.3 Investor Categories Trading Behaviour and Irrational Behaviour in Indian Equity Market 188
4.4 Trading Behaviour of Investor Categories and Major Indices in Indian Market 189
5 Conclusion 190
References 190
Corporate Finance 192
Ownership Classification and Technical Efficiency in Indian Manufacturing Firms: A Stochastic Frontier Approach 193
1 Introduction 194
2 Literature Review 195
3 Empirical Estimation Framework 196
4 Data and Methodology 198
4.1 Data 198
4.2 Measures of Financial Constraints 199
4.3 Definition of Variables 200
4.4 Methodology 201
5 Findings and Discussions 201
6 Conclusions 204
References 204
Investment Trends in Venture Capital and Private Equity in India 207
1 Introduction 207
2 Objective of the Study 208
3 Literature Review 209
4 Data Sources and Methodology 210
5 Analysis of Investment Trends of VCPE Investments in India 210
6 Analysis of YOY Growth Rate for Value of VCPE Investments’ Period Wise 211
7 Analysis of CAGR for Value of VCPE Investments and Number of VCPE Deals 215
8 Analysis of Aggregate Industry Wise VCPE Investments in Value and Number of Deals 216
9 Industry Growth Through VCPE Investments Measured by CAGR 218
10 Analysis of Total VCPE Investments Stage Wise by Value and Number of Deals 220
11 Analysis of Seasonal Variations in the VCPE Investments Stage Wise 221
12 From 1998 to 2003 223
13 From 2004 to 2009 223
14 From 2010 to 2016 225
15 Analysis of CAGR of VCPE Investments Stage Wise 226
16 Conclusion 228
References 229
Impact of Firms’ Market Value on Capital Structure Decisions: Panel Data Evidence from Indian Manufacturing Firms 230
1 Introduction 231
2 Determinants of Capital Structure: Theory and Evidence 232
3 Capital Structure—Some Stylized Facts 236
4 Source of Data and Methodology 240
5 Findings and Discussions 242
6 Conclusion 244
References 245
Corporate Governance and Cash Holdings: An Empirical Investigation of Indian Companies 248
1 Introduction 248
2 Review of the Literature 250
2.1 Corporate Governance and Cash Holdings 250
2.2 Corporate Governance Mechanisms 251
2.3 Measurement of Corporate Governance 253
3 Data and Sample 253
4 Variable Description 254
4.1 Cash Holdings 254
4.2 Corporate Governance Variables 254
4.3 Financial and Control Variables 256
5 Research Design 258
6 Empirical Results 259
7 Conclusion 270
References 271
Financial Risk Management 274
Empirical Analysis of the Determinants of Dividend Payouts of Indian Banking Stocks Using Panel Data Econometrics 275
1 Introduction 276
2 Research Design 276
2.1 Statement of the Problem 276
2.2 Review of Literature 276
2.3 Research Gap 278
2.4 Scope for Further Research 278
3 Research Methodology 279
3.1 Objectives for the Study 279
3.2 Research Hypothesis 279
3.3 Data Collection 279
3.4 Panel Data Econometrics 279
3.5 Limitations of the Study 280
4 Data Analysis and Interpretation 281
4.1 Dependent Variable 281
4.2 Independent Variables 281
4.3 Capital Structure 281
4.4 Earnings Per Share 281
4.5 Return on Assets 282
4.6 Size of the Firm 282
4.7 Panel Data Analysis: Summary Report for Panel Data Analysis 282
4.8 Pooled OLS (Ordinary Least-Squares) Model 283
5 Findings 288
6 Conclusion 288
7 Suggestions and Scope for Further Research 289
References 289
Asset Liability Management in Commercial Banks in India 290
1 Introduction 290
2 Review of Literature 291
3 Research Methodology 293
3.1 Rate Sensitivity Assets 293
3.2 Rate Sensitivity Liabilities 295
3.3 Interest Sensitivity Ratio 297
3.4 Net Interest Income 299
3.5 Net Interest by Total Funds Ratio 301
3.6 Gap Analysis 303
4 Findings and Analysis of the Study 305
5 Conclusion 306
6 Limitations of the Study 306
7 Future Research Possibilities 307
References 307