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| 1 |
ID:
120081
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| Publication |
2012.
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| Summary/Abstract |
The study presents an early warning system for predicting banking fragility in India. Using the index method, distress episodes in the banking system are identified during 1994-2007. On the basis of standard tools of probit regression models, the results indicate growing interlinkages of economic liberalization with the Indian banking sector. Slowdown in real output, increase in headline inflation rate, increase in spread between the central bank policy rate and short-term risk-free rate, increase in proportion of broad money supply to foreign exchange reserves, REER overvaluation from trend and decrease in proportion of trade balance to GDP enhance the probability of banking fragility in India. The behaviour of the identified crucial indicators, cross-checked by the signal extraction approach, reveals adequate signalling power due to their low Noise-to-Signal Ratio. The estimated 'lead time' of the indicator variables in signalling banking distress also offers a modest time period to the government to initiate pre-emptive policy action to strengthen the banks.
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| 2 |
ID:
143604
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| Summary/Abstract |
Increases in military spending have a big impact on the socioeconomic conditions in any country. However, there is no consensus as to whether the rising military expenditure is beneficial or detrimental to economic growth. The present study chose China as a case study to empirically examine a complex relationship between military expenditure and economic development. The findings from the Johansen cointegration test indicated that there existed a long-run relationship between China’s military spending and economic growth. Furthermore, the Granger causality test detected a unidirectional causality from economic development to military expenditure. These results were further confirmed by the findings from the impulse response function. This means that China represents an example of a developing economy where the size of military expenditure expands in the process of economic transformation.
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