Press Release RBI Working Paper Series No. 07 Measures of Nominal and Real Effective Lending Rates of Banks in India@Deepak Mohanty, A B Chakraborty and S Gangadaran Abstract 1 In a bank-dominated financial sector, lending rates play an important role in the transmission of monetary policy. Yet, it is difficult to observe both nominal and real interest rates in the real time. Even ex post computation of effective nominal and real rates is challenging as banks' effecti

Press Release RBI Working Paper Series No. 06 Evidence of Interest Rate Channel of Monetary Policy Transmission in India@Deepak Mohanty * With the development of domestic financial markets and gradual deregulation of interest rates, monetary policy operating procedure in India in the recent years has evolved towards greater reliance on interest rates to signal the stance of monetary policy. This process is buttressed by significant evidence that policy rate changes tr

Press Release RBI Working Paper Series No. 05 Estimation of Capacity Utilisation in Indian Industries: Issues and Challenges@Atri Mukherjee and Rekha Misra Abstract *The estimation of capacity utilisation (CU) derives its significance from the fact that, if properly assessed, it may provide a reliable indication of incipient inflationary pressure in an economy. Measurement of CU is not confined to a unique method and can be measured for an economy, industry or plant t

Press Release RBI Working Paper Series No. 04 Asset Pricing Model for Inefficient Markets: Empirical Evidence from the Indian Market @Debasish Majumder Abstract *In the last decade, the efficient market hypothesis and its validity for emerging markets grew as a fertile topic of debate in finance. However, the dilemma of market efficiency still remains intractable. It is more likely that any literature review in respect of market efficiency would produce contradictory

Press Release RBI Working Paper Series No. 03 Benchmarking Indian Regulatory Practices to the G20 Financial Reforms Agenda @Anupam Prakash and Rajiv Ranjan 1Post the crisis of 2007-09, financial stability is regarded as a prime policy objective. The reemergence of threats to the banking system in the light of sovereign debt problems in advanced economies has reaffirmed the importance of pursuing financial sector reforms at the international level. The global regulato

Press Release RBI Working Paper Series No. 02 Gold Prices and Financial Stability in India@Rabi N. Mishra and G. Jagan Mohan Abstract * There has been an almost sustained rise in the international gold prices since 2002, with just one deep correction in 2008. As gold is an integral part of savings of a large number of investors, this has raised apprehensions whether any correction in gold prices will have destabilising implications on the financial markets. In this ba

Press Release RBI Working Paper Series No. 01 Inflation Forecasting: Issues and Challenges in India@Muneesh Kapur 1This paper focuses on modelling and forecasting inflation in India using an augmented Phillips curve framework. Both demand and supply factors are seen as drivers of inflation. Demand conditions are found to have a stronger impact on non-food manufactured products inflation (NFMP) vis-a-vis headline WPI inflation; moreover, NFMP is found to be more persis

Press Release RBI Working Paper Series No. 21 Inter-connectedness of Banks and NBFCs in India: Issues and Policy Implications @ A Karunagaran Abstract * The recent global financial crisis (2007-09) has clearly highlighted the gravity of high financial inter-connectedness within the financial system. In the Indian context, this brief study attempts to explore the financial inter-connectedness between NBFCs (both deposit taking and non-deposit taking) with banking syst

Press ReleaseRBI Working Paper Series No. 22 Credit and Growth Cycles in India: An Empirical Assessment of the Lead and Lag Behaviour @ Krittika Banerjee Abstract* Procyclicality in the flow of credit has been a factor underpinning the magnified amplitudes of boom and bust phases of the business cycle, particularly in bank dominated financial systems. This paper studies the lead-lag pattern in the interaction between credit and growth cycles of India at three levels i

Press Release RBI Working Paper Series No. 20Credit Channel of Monetary Transmission in India - How Effective and Long is the Lag?@Jeevan Kumar Khundrakpam Abstract *This paper examined the operation of credit channel of monetary policy rate transmission in India during the post-LAF period of 2001:3 to 2011:3. Drawing on the literature, two reduced form equations, one representing nominal bank credit and the other real bank credit was estimated. The regression estimat