Pro‐market reforms and allocation of capital in India
Abstract
Purpose
The purpose of this paper is to study the efficiency of capital allocation, across levels of ownership, in the aftermath of pro‐market reforms in India.
Design/methodology/approach
The paper measures investment efficiency using the accelerator principle and examines the effect of ownership type on capital allocation.
Findings
No significant improvement in capital allocation during the period studied is found. The findings suggest firms face significant costs in adjusting their capital stock.
Originality/value
The paper uses unique data to estimate the elasticity of capital with respect to output.
Keywords
Citation
Desai, S., Eklund, J. and Högberg, A. (2011), "Pro‐market reforms and allocation of capital in India", Journal of Financial Economic Policy, Vol. 3 No. 2, pp. 123-139. https://doi.org/10.1108/17576381111133606
Publisher
:Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited