Is India Hedged Against Systemic Risk? An Attempt at an AnswerGurbachan Singh Review of Market Integration, 2013, vol. 5, issue 1, 83-129 Abstract: India has large twin deficits, high prices of some real assets, and (less familiar) fragile financial interdependence between banks and the government. So there is a systemic risk. However, India has a reasonably good record so far with regard to avoiding financial crises. This is due to five mitigating factors: ( a ) financial repression in banks; ( b ) unanticipated jumps in inflation rate; ( c ) somewhat regular bailouts; ( d ) misplaced confidence; and ( e ) good growth. The first three factors have ‘persistent’ costs. There are reasons to believe that these costs are high. The fourth factor is not a reliable ‘hedge’ against systemic risk. Finally, growth is a camouflage rather than a solution. The bottom line is that there is a serious problem at hand even if there has been no ‘financial crisis’ for long. We make long-term policy suggestions in this extensive but simple analytical article on the economic aspects of macro-financial stability. Keywords: Systemic risk; current account deficit; fiscal deficit; banks; liquidity; capital adequacy; inflation; real estate; gold; stock market; ‘portfolio choice by prescription’; financial repression; international credit line; confidence; political stability (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:revmar:v:5:y:2013:i:1:p:83-129 Access Statistics for this article More articles in Review of Market Integration from India Development Foundation |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
Örebro University School of Business.