International Journal of Management and Social Sciences Research (IJMSSR) Volume 2, No. 8, August 2013
ISSN: 2319-4421
Globalization and the Indian Capital Market Ms. Fiona Jeelani, Assistant Professor, School of Business Studies, Islamic University of Science and Technology, Pulwama, India Prof. D. Mukhopadhyay, Dean, College of Management, Shri Mata Vaishno Devi University, Katra, India Dr. Ashutosh Vashishtha, Assistant Professor, School of Business Economics, Shri Mata Vaishno Devi University, Katra, India
ABSTRACT The financial system is a dynamic segment of the country’s future growth trajectory. It is a well-recognized fact that efficient, developed and liberalized financial markets can lead to better economic growth by improving the efficiency of allocation and employment of savings in the economy. Ever since the reforms started in the 1990’s, the Indian Capital Market has grown rigorously in financial depth. But since the global financial crisis in 2007, although financial assets have surpassed the pre-crisis totals, growth has languished. Financial Globalization has also dithered as rapid global capital mobility has been accompanied by an increased frequency of financial crises in both the developed and developing countries. The recent global financial crisis has underlined the importance of systemic risk due to the interconnectedness of markets and the need for macro-prudential monitoring has drawn a lot of attention to the role of regulatory bodies. Inclusion, growth, and stability are the three objectives of any reform process, and these objectives are contradictory. With the correct reforms, the financial sector can be an enormous source of job creation both directly as well as indirectly. In this connection, India has a choice between two pathways. The first being to retreat the progression towards advanced financial liberalization. This could protect the economy from the possibility of volatile movements of capital that create instability and substantial constraints upon domestic economic policies in the future and at the same time hamper the level of growth as an emerging market. Secondly, to reset to a controlled level of liberalization where in India can protect itself against global instability and at the same time can make its progress towards transforming into a developed economy. The challenge is how India can learn from past experience to escalate to the next level of financial market development, so that it can continue to support the progression that it faces advancing forward. This paper traces the level of financial development of the Indian Capital Market since the reforms, as well as the decline in growth trajectories after the global crisis, and concludes that controlled financial liberalization is essential for sustained growth of the economy.
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Keywords: Indian Capital Market, Globalization, Financial Crisis, Growth, Stability.
INTRODUCTION Ever since the reforms, in the 1990’s, capital mobility had linked the national financial markets into a more tightly interconnected Global system. Different forces have fostered the wave of capital market development and financial globalization. These forces can be grouped into three categories: government policies, technological and financial innovations, and demand and supply-side factors. (Torre & Schmukler 2007). In most developing countries, the Stock market liberalization took place during the period 1985 to 1995 when market capitalization of all emerging markets increased by 1,007 percent compared to an increase of 253 percent in the case of developed markets. The share of emerging markets in the world market capitalization increased from 4 percent in 1985 to 11 percent in 1995. Similarly, the trading value in these markets increased by 2,189 percent compared to 564 percent increase for the developed markets over the decade. As a result, the emerging markets share in trading volume increased by more than three times, i.e., from 2.7 percent to 8.9 percent in ten years, signaling significant growth in these markets (Husain & Qayyum, 2006). A well-functioning financial market is critical, especially for emerging market economies (EMEs). India is one of the five countries classified as big emerging market economies by the World Bank. This list also includes People’s Republic of China (PRC), Indonesia, Brazil, and Russia. These countries have made the critical transition from a developing country to an emerging market. The World Bank has predicted that these five biggest emerging markets’ share of world output will have more than doubled from 7.8% in 1992 to 16.1% by 2020. (World Bank 1997). The economic development of a country unvaryingly depends upon the depth and effective functioning capital market. A strong and healthy regulatory system is the prime requirement for the growth and efficiency of any capital market. Advent of modern techniques and
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information technology in some vital areas of capital market architecture like trading, payment and settlement, have given some strength and advantage to Indian capital market but it still lacks the robustness to compete effectively with the major international capital markets. In recent decades, financial globalization took a quantum leap forward as cross- border capital flows rose from $0.5 trillion in 1980 to a peak of $11.8 trillion in 2007 . But they collapsed during the financial crisis, and as of 2012, they remain more than 60 percent below their former peak (Fig. 1) (McKinsey, 2013) Figure: 1
The financial crisis resulted from a confluence of leverage, risk, and deficient regulation—and then globalization led to contagion, which intensified the impact. Policy makers have begun to adjust their views on the benefits and costs of financial-sector liberalization and capital account openness. As per the macroeconomic policy trilemma for open economies (also known as the inconsistent trinity proposition), an open capital market deprives a country’s government of the ability simultaneously to target its exchange rate and to use monetary policy in pursuit of other economic objectives. (Obstfeld & Taylor, 2002). Consequently there are other negative effects of capital market globalization which are often so large they seem to outweigh any benefits in terms of access to more capital
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inflows. Financial liberalization of the capital market has created exposure to an increased propensity to financial crisis, deflationary impact on real economic activity and reduced access to funds for small scale producers and also other social effects in terms of loss of employment and more volatile material conditions for citizens.
THE INDIAN CAPITAL MARKET Although the Indian Capital market is approximately 180 years old, yet it is quite young in terms of extent of globalization and international competitiveness. The Capital Market is an important protagonist in the process of mobilization of finance directly from the investor. The foremost purpose of capital market is to enable allocation or reallocation of financial resources so as to foster the economic growth. Indian capital markets can be traced back to 1830 when business on corporate stocks and shares in Bank and Cotton presses started in Bombay. The very first stock exchange in India, the Bombay Stock Exchange, came into existence in 1875. The stock markets have had many turbulent times in the last 180 years of their existence. It started as an independent body of stockbrokers, which started doing business in the city under a banyan tree. Business was essentially confined to company owners and brokers, with very little interest displayed by the general public. From 1939 onwards, the trading list widened, although the number of brokers recognized by the banks and merchants were very few (only six during 1840-50). The year 1850 marked a rapid transformation in the history of the Indian Stock market through a rapid development of the commercial enterprise and the brokerage business. This resulted in an increased number of brokers (sixty) by 1860. The start of the American Civil War in 1860-61, further increased the number of brokers from 200 to 250. However, the end of the war resulted in a huge slump in the securities market and the brokers continued their transactions in a street (now known as the Dalal Street). The centrally coordinated planning process started in India in 1951, with importance being given to the formation of institutions and markets. The Securities Contract Regulation Act 1956 became the parent regulation after the Indian Contract Act 1872, a fundamental law to be followed by security markets in India. To regulate the issue of share prices, the Controller of Capital Issues Act (CCI) was passed in 1947. 1980s witnessed an explosive growth in the Indian securities market with millions of investors suddenly discovering lucrative opportunities. Table 1 below traces the brief history of the Indian Capital market.
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Table: 1 Date
Event
1830
Business on corporate stock & shares in bank & cotton presses started in Bombay
1875
The ―Native shares and stock broker association‖ was formed
1956
Securities Contracts (Regulation) Act became parent regulator
1957
BSE granted permanent recognition
1986
Sensex - the countries first equity index launched
1992
SEBI Act established
1993
NSE was exchange
1995
BSE On Line Trading (BOLT) system introduced
1997
BOLT expanded Nation wide
1999
Central Depository (CDSL) was set up
1999
Interest Rate Swaps (IRS)/Forward Rate Agreement (FRA) allowed
2000
Equity derivatives introduced
2001
Stock options launched
2002
Fungibility of ADR/GDR
2007
Launch of Unified Corporate Bond Reporting platform: Indian Corporate Debt Market (ICDM)
2008
Currency derivatives introduced
2009
BSE Launches BSE StAR MF – Mutual Fund trading platform
2009
Launch of clearing and settlement of Corporate Bonds
2010
Commencement of Volatility Index
2010
Commencement of Shariah Index
2012
Launch of BSE - SME Exchange Platform
2013
SENSEX becomes S&P SENSEX as BSE ties up with Standard and Poor's
recognized
as a
stock
Services
Ltd.
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Reforms to capital markets were high on the priorities of policy makers when India embarked on market-oriented reforms in the early 1990s. These efforts had several motivations: the broad idea of markets playing a dominant role in resource allocation, an awareness of the opportunity cost that India was suffering by not being open to global capital flows, and an immediate reaction to the fixed income and equity market scandal of 1992. The Securities and Exchange Board on India Act, 1992 (the SEBI Act) came into existence with the primary objective to protect, develop and regulate the security markets. Since then, the capital markets in India have experienced tremendous progress because of the welldeveloped regulatory system in place. An empirical study by Goel and Gupta (2011) shows that capital market reforms that started in 1990s contributed to the development in the stock markets in India. This study has found significant improvement in the economy after liberalization. All indicators show improvement in stock market activities in the post liberalization period. Market capitalization ratio, value traded ratio, and turnover ratio have increased. These indicators together with decline in volatility are an evidence of stock market development in India. Although, there are a total of 23 Stock exchanges in India, the information in table 2 reveals that out of total, the major trading takes place in just two stock exchanges, that is, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Table 2: Trading Statistics of Indian Stock Exchanges(Quantity of Shares Traded)(Lakh)
Source: SEBI report 2012
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Data from these two stock exchanges, reveals that during the financial year 2012-13 resource mobilization through primary market (equity issue) witnessed an upward movement (Table 3). Table 3: Resource Mobilization through the Primary Market (Rs. crore) Mode 20092010-11 2011-12 201210 13# 2500 9451 35611 4974 Debt 46736 48654 12857 13050 Equity
Of which 24696 35559 5904 6043 IPOs Number 39 53 34 20 of IPOs Mean 633 671 174 302 IPO size 212635 218785 261282 263644 Private placemen t Total 261871 276890 309750 281667 Source: Securities and Exchange Board of India (SEBI) Notes:
# as on 31 December 2012 (Provisional); the Equity issues are considered only equity public issues; The cumulative amount mobilised as on December 2012 through equity public issues stood at Rs.13,050 crore. During 2012-13, 20 new companies [initial public offers (IPOs)] with resource mobilisation amounting to Rs.6,043 crore were listed at the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) with mean IPO size of Rs.302 crore. (Economic Survey 2012-13). India has achieved considerable financial deepening in recent years, owing largely to the reforms and the foreign capital the country has attracted. McKinsey (2006) points out that till 2001, the reforms had not produced much financial deepening, with the total value of financial assets never exceeding the GDP by more than10%. Then deepening started in a major way and by 2004, the total value of financial assets stood at a respectable 160% of the GDP which further exploded to 305% in 2007. This meant a CAGR (Compound annual growth rate) of about 11% between 2001 and 2007. During this period equity markets showed the most stunning increase (from 23% of GDP to 165%, a CAGR of as much as 39%), corporate bonds showed equally remarkable gains but on an insignificant base (1% to 7.3%; a CAGR of 39%) (Chakrabarti, 2010). Government securities showed a relatively moderate rise (27% to 63%; a CAGR of 15%) while Bank deposits rose at a snail’s pace (57% to 69%; a CAGR of 3%).
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Financial integration among economies has the benefit of improving allocation efficiency and diversifying risk. However the recent global financial crisis, considered as the worst since the Great Depression has re-ignited the debate about the merits of financial globalization and its implications for growth especially in developing countries. A comparison made by Chakrabarti (2010) shows the financial depth in India and other Asian countries in 2004 and 2007 respectively. In 2004 India’s financial depth was among the worst among Asian countries. By 2007, India’s financial depth was in the median range of the Asian countries with only China and Malaysia among emerging markets ahead. The instability in the equity markets since 2007 has shaken these figures but the message of over-all deepening remains unchanged. Looking at the extent of financial deepening during the 2004-07 period, India ranks first among major Asian countries, largely driven by the gain in the equity markets. Even though the penetration level of the financial services sector continues to be extremely low. There needs to be a rigorous effort to adequately extract the full potential of India’s savings, which stands at an impressive 34% of the GDP. As on July 2011, only 1% of households had invested in mutual funds and a mere 0.72% of households in equity shares. (India Financial Service Outlook, 2012). The corporate bond market has remained relatively underdeveloped. This has been the result of dominance of the banking system combined with the weaknesses in market infrastructure and the inherent complexities. Efficient and developed financial markets can lead to increased economic growth by improving the efficiency of allocation and utilization of savings in the economy. There is a growing body of empirical analyses, including firm-level studies, industry-level studies, individual country studies, and cross-country comparisons, that prove this strong, positive link between the functioning of the financial system and long-run economic growth. Specifically, financial systems facilitate the trading, hedging, diversifying, and pooling of risk. In addition, they better allocate resources, monitor managers and exert corporate control, mobilize savings, and facilitate the exchange of goods and services. (Levine, 1997) The pressures of financial liberalization are very high as the economic development of a country unvaryingly depends upon the depth and effective functioning of the capital market. A strong and healthy regulatory system is the prime requirement for the growth and efficiency of any capital market. Advent of modern techniques and information technology in some vital areas of capital market architecture like trading, payment and settlement, have given some strength and advantage to Indian capital
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market but it still lacks the robustness to compete effectively with the major international capital markets. India’s capital market lags behind those of other developed and developing markets in financial depth also. Indian exchanges are somewhat undiversified. Equities and commodities comprise approximately 90% of trading volume. Most of the other markets have a much more diversified mix, with interest rate futures, foreign exchange futures and corporate bonds accounting for a large share of exchange trading. (http://www.dnaindia.com/) The need to eliminate financial repression (McKinnon, 1973) is a powerful argument in favor of financial liberalization. Repressive policies are seen to be detrimental to financial deepening, in the context of the observed empirical relationship between financial deepening and growth. Financial repression is said to have a depressive effect on savings rates and thereby to result in capital shortages and adversely affect growth. It is also argued that financial repression tends to selectively ration out riskier projects, irrespective of their social relevance, because interest rate ceilings imply that adequate risk premiums cannot be charged. In terms of Financial Development, (World Economic Forum, 2012) India ranks 40th among the 62 countries covered in the report, which shows a four-spot decline from 2011. The financial development index is one way of picturing the financial market developments. Some of the findings show that among the components of this index, India ranks poorly in terms of financial sector liberalization – 58 out of 62. India has shown a slight improvement in financial stability which ranks the country at 46. According to the report it is quite clear that, India’s liberalization could be speeded up.
THE SLOW DOWN AFTER THE GLOBAL FINANCIAL CRISIS Ever since the Indian Economy was liberalized, India has seen a tremendous growth of its capital markets with close to 5,000 Initial Public offerings (IPOs), second only to the United States, although the Capital raised was lesser than other BRIC countries (Desai, 2011). In the year 2010, India ranked 4th with respect to the amount of capital raised, contributing to 3.7% of Global IPO share, China contributed to almost 47% of the Global Capital raised in IPOs. From 2008 to 2010, the amount raised in IPOs in China increased by 250%, but in India, there was no substantial increase. This seemed to indicate that the Indian Capital Market is losing its growth momentum in the post crisis financial world and that china is increasingly becoming popular with respect to attracting foreign capital. (Ernst & Young, 2011).
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Even though, the Indian equity market has become the third largest after China and Hong Kong in the Asian region. According to a report by Asian Development Bank, as of March 2009, the market capitalization was around $598.3 billion (Rs 30.13 lakh crore) which is onetenth of the combined valuation of the Asia region. The market experienced a slowdown since early 2007 and continued till the first quarter of 2009. The market capitalization of Indian Stock market can be traced in figure:2 below and the dip as the result of the global crisis is quite evident. Later, the market has revived to an improved level, but the growth rate seen before the crisis has not yet been attained.
Fig. 2 Source: Standard and Poor’s (2011) As figure: 3 indicates, the total foreign investment inflows, which include both the direct investment as well as the portfolio investment, have been rising rapidly over the years. The cumulative Foreign Institutional investors (FII) investments has raised over six folds since 2001. The figure shows the zooming growth, which is visible during the 2004-07 phase, just prior to the crisis and the revival after the crisis. Figure: 3 (US $ Million)
Trends in Foreign Investment Inflows 80000 70000 60000 50000 40000 30000 20000 10000 0
Source: Hand Book of Statistics SEBI (2011)
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Foreign investments bring the necessary standards and the pressures of competition that contributes to the efficacy and growth of an economy. Indian capital markets have to be assessed for whether the financial apparatus is prepared to handle the sharp movements of international flows as convertibility is no longer a twofold choice, but one of finding the optimal level. After the shock of the global financial crisis, emerging as well as developed economies are trying to figure out whether openness is necessary for a healthy financial sector. India has a choice between two pathways, as to how to progress in the future. The two pathways are, either to ―retreat‖ from the current position of further liberalizing the financial sector, which would eventually result in lower growth, or either to ―advance‖ forward with gradually liberalizing but at the same time regulating and controlling the cross border capital flows. The strong critique of financial liberalization relates not only to the enhanced possibility of crises, but to the argument that it has a clear bias towards deflationary macroeconomic policies and forces the state to adopt a deflationary stance to appease financial interests. (Patnaik, 2003). Emerging economies have long worried that a large financial sector is a potential hazard, and if fully liberalized, they curtail further financial market development. But at the same time, as predicted in a report, (McKinsey, 2013) by 2020 as emerging economies account for a larger share of global GDP, their lack of further financial deepening would reduce the global ratio by around 25 percentage points. A more conservative market can hold back the access of the local economy to much needed expansion capital. Also, a study by Ranciere et al. 2008, find countries with occasional financial crises grow faster on an average than those with completely stable conditions. The ―retreat‖ scenario is one which is shaped by a high degree of risk aversion—one that may squeeze the financing needed for investment in innovation and R&D, business expansion, infrastructure, housing, education, and human capital development. As a consequence of the crisis a reduction in long-term lending to corporations is already apparent in Europe. In such a scenario, the Indian economy may face massive investment needs as it gets urbanized and industrialized, but at the same time may encounter a shortage of capital. If other developed Countries follow the same trend they would find themselves with surplus capital but with too few good investment opportunities; savers and investors in these countries could face lower returns. If the trend of retreat is to be chosen, the value of financial assets relative to GDP would remain flat or even decline by 2020. Based on an analysis (McKinsey, 2013) of the relationship between financing to households and non-
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financial corporations and economic growth, it is estimated that the lack of financial deepening could potentially reduce GDP growth by roughly 0.45 percentage points. The crisis has stressed the need for greater caution and stability, but unless current regulatory reform initiatives succeed in restoring confidence, there is a possibility of excessive caution. This will risk creating a financial system that fails in its primary purpose that is of providing a healthy flow of credit to the real economy. Greater integration of the Indian capital market offers four principal, and inter- related, benefits: Better allocation of capital, more efficient risk sharing, enhanced portfolio diversification and lower cost of capital (Merton, 1987). Greater participation from Global Institutional Investors assures greater liquidity and enhanced reputation of the market, leading to better valuations of companies listed on Indian Exchanges. In addition, such reforms would also have additional benefits like job creation in financial cities of India and exposure to global corporate securities laws. On the contrary, with completely unrestrained capital flows, it is no longer possible to control the amount of capital inflow or outflow, and both movements can create consequences which are undesirable. It is increasingly recognized that liberalization can dismantle the very financial structures that are crucial for economic growth. A better outcome would involve more sustainable growth and development of the financial system.
CONCLUSION The health of an economy is reflected in the performance of its capital market. India’s economic growth is second only to China but unfortunately the phenomenal growth rate has not reflected in the performance of its capital market. Performance of a nation’s capital market is not merely reflected by the performance of its secondary market and indices of stock exchanges, but also by the positioning of the market in the global financial sphere in terms of reputation and existence of foreign companies. India is among the few countries which were not too severely affected by the contagion effects of the Global Financial crisis. The slower and more cautious pace of financial market liberalization in India is one significant reason for this. But the short-term debt and the dependence on volatile capital flow is rising. Because India (like China) has not liberalized its capital account to the extent done by many other developing countries, it managed to avoid or stave off the contagion that afflicted many East Asian countries in the late 1990s. However, India did experience a balance of payments crisis in 1990-91, resulting in it being subjected to an IMF-
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style adjustment program that heralded the transition from a creeping process of liberalization that characterized the 1980s to a more accelerated process of economic reform starting in 1991. Since then, there has been a significant increase in the inflows of portfolio capital. Even though, India, like most late industrializing countries, created strongly regulated financial markets aimed at mobilizing savings and using the transitional function to influence the size and structure of investment. They did it through directed credit policies and differential interest rates, and the provision of investment support to the growing industrial class in the form of equity, credit and low interest rates. India had some higher immunity to resist the global melt down which started in USA in 2007. India till now has strictly regulated the market by active participation of financial regulators. The possibility of volatile movements of capital has become one of the most significant issues in developing countries today. Since rapid movements in and out of a country creates instability in exchange rates and consequent problems within the economy. But even more than that the fear of capital flight has posed substantial constraints upon domestic economic policies. It is quite evident that complete financial liberalization— in the sense of implementing all of the various internal and external measures, is neither necessary nor desirable. In fact, the more successful developing country have not implemented such extreme measures. There has to be some degree of directed credit; and some controls on cross-border capital flows. Instead of retreating from the path of liberalizing the capital markets and external economic integration, India can advance gradually towards a more open capital market, but again with controlled policies and regulation in the areas necessary. It is important for authorities to continue to maintain some policies that will allow them to regulate capital flows. Controls on the inflows of capital are as important as controls on outflows, since sudden large inflows can be as destabilizing for an economy as outflows. With the right actions by financial institutions and policy makers, India can have a balanced approach to financial market development and globalization that would support economic growth. Some capital control measures may be required not only to prevent crises and excessive changes in the exchange rate, which render the economy externally uncompetitive, but also to enable the continuation of domestic financial policies that promote sustainable industrialization. There is need for improved macro prudential supervision and mutual confidence and cooperation among national regulators. While the Indian capital market would develop more robust financial systems with sound regulatory architecture in place to provide stability, foreign capital would also flow in. At the
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same time, a close macro prudential supervision would watch for potential asset bubbles and dangers associated with very large current account imbalances. In this scenario, India can pursue opportunities for sustainable financial deepening, such as the expansion of corporate bond markets, which still remains underdeveloped. Capital-account convertibility accompanied by domestic prudential regulation will ensure against boom- bust volatility in capital markets. With completely uncontrolled capital flows, it is no longer possible for a country to control the amount of capital inflow or outflow, and both movements can create consequences that are undesirable. One persistent theory that warrants to be forgotten is that greater international trade exposure and trade dependence necessarily require greater financial integration and both internal and external financial liberalization. It is a fact that the most of the successful trading economies have been those which have somewhat more controlled financial systems. China is an example, which is a major exporter and has excessive trade dependence and at the same time has a financial system which allows the government to carefully channel credit in desired areas. The rapid expansion of China does not appear to have been inhibited by such controlled credit. Therefore, some government control over the financial sector remains essential. For moving towards a more stable financial system, India will have to consider that openness to foreign investment and capital flows entails risk, as recent crises demonstrated, but it also brings clear benefits. Tightly restricting capital inflows may reduce the risk of contagion, but it also limits the benefits, such as greater capital access and competition, that foreign players can bring to a financial sector. The objective of developing a competitive, diverse financial sector deserves to be a central part of the policy plan. To build the corporate bond markets India must have standardized rating systems, clearing mechanisms, and a solid regulatory foundation. Private placement markets are important for high-yield issuers, and secondary trading markets for government debt can spur the growth of corporate bond markets. The policy makers should promote the development of new financial intermediaries and instruments aimed at filling gaps for funding of largescale investment projects, infrastructure, and SMEs which may be in short supply. As India moves toward liberalizing their capital accounts over time, they will need to build robust monitoring and supervisory capabilities. Information flows and market monitoring need to be improved. Healthier, deeper, and more open financial markets require more specific and timely information from market participants. Policy
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makers need to monitor potential market risks more closely. It is essential to consider the capacity of the system to provide financing for economic growth. Facilitating the deepening and maturity of financial markets and restoring more stable international capital flows can ensure that borrowers have better access to capital, allowing businesses, governments, and households to invest and build for the future. The suggestion is that globalization of the Indian Financial market should not be stopped but rather careful monitoring of asset exposures is necessary to get a sense of the degree of India’s vulnerability to a crisis.
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[8] ―India Financial Service Outlook‖ ( 2012), Perspective from experts, City of London. Available at: 7.154.230.218/NR/rdonlyres/.../BC_RS_IFSSO201 2.pdf [9] Levine, R. 1997. ―Financial Development and Economic Growth: Views and Agenda‖. Journal of Economic Literature 35(2): 688–726. [10] McKinsey, 2006, ―Accelerating India’s Growth through Financial System Reform‖. McKinsey Global Institute. [11] McKinsey, 2013. ―Financial Globalization: Retreat or Reset‖. McKinsey Global Institute, March [12] McKinnon Ronald I. and Shaw Edward (1973). ―Money and Capital in Economic Development‖, Washington, D C: Brookings Institution. [13] Obstfeld Maurice and Taylor Alan M., 2002, ―Globalization and capital markets‖, Working Paper 8846, NBER, March. [14] Patnaik and Prabhat (2003). ―The humbug of finance‖. In The Retreat to Unfreedom. Tulika, New Delhi. [15] Merton R. 1987. ―A simple model of capital market equilibrium with incomplete information‖. Journal of Finance 42, 483-510 [16] Ranciere Romain, Tornell Aaron, and Westermann Frank. 2008. ―Systemic Crises and Growth.‖ Quarterly Journal of Economics 123 (1): 359–406. [17] Torre Augusto de la and Schmukler Sergio L., ―Emerging Capital Markets and Globalization, The Latin American Experience‖ a Co-publication of Stanford Economics and Finance and the World Bank, 2007 [18] World Bank, 1997. Global Economic Prospects and the Developing Countries: 1997. Washington, DC: World Bank [19] World Economic Forum, 2012. ―The Financial Development Index‖, USA Inc.
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