Measuring financial development in India: A PCA approach
Financial development is a multidimensional concept and its measurement is thorny for the researchers. A good measurement of financial development is decisive in evaluating the progress of financial sector development and understanding the corresponding impact on economic growth and poverty reductio...
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| Format: | Article |
| Language: | English |
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General Association of Economists from Romania
2015-03-01
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| Series: | Theoretical and Applied Economics |
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| Online Access: |
http://store.ectap.ro/articole/1066.pdf
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| Summary: | Financial development is a multidimensional concept and its measurement is
thorny for the researchers. A good measurement of financial development is decisive in
evaluating the progress of financial sector development and understanding the corresponding
impact on economic growth and poverty reduction. The study makes use of the PCA
(Principal components analysis) to construct a financial depth index (IFD) that serves as a
proxy variable of financial development position of the country. This paper used Indian
time series data covering a period from 1980 to 2011(Index-1) and 1990-2011(Index-2) for
measurement of two separate financial development index. This study gives insight for
understanding various financial sector proxies as well as to enhance the knowledge of
financial position of the country. The proposed index is easy to compute and comparable
across countries. |
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| ISSN: | 1841-8678 1844-0029 |