Asian Journal of Research in Business Economics and Management
Year : 2013, Volume : 3, Issue : 11
First page : ( 64) Last page : ( 78)
Online ISSN : 2249-7307.

Impact of Financial Sector Reforms on Savings and Capital Formation in India

Dr. Sharma Vijay Kumar*, Mr. Kumar Neeraj**

*Professor, Department of Commerce, H.P. University, Shimla, India

**Lecturer, Smt. Jawala Devi College of Education, Sanghol, Punjab, India

Online published on 7 November, 2013.

Abstract

In the beginning of 1990’s India was faced with serious fiscal and financial problems and it was against this backdrop, that financial sector reforms were initiated. The basic function of the financial sector is to tap the surplus funds available in the economy and channel them to the productive investments. The rate for savings and capital formation has been obtained for the two sub periods (break taken in the year 1992–1993) and for the entire time period from 1950–51 to 2010–2011. Subsequently chow test for structural break has been performed to test for the impact of financial sector reforms. From the analysis it can be inferred that on the whole a substantial increase in the rate of growth of both savings and capital formation has occurred after the reforms.

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Keywords

Financial sector reforms, financial development, Gross domestic savings, capital formation.

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