FII Inflows to India: Their Effect on Stock Market Liquidity and Volatility
Article Details
Pub. Date
:
July, 2004
Product Name
:
The IUP Journal of Applied Finance
Product Type
:
Article
Product Code
:
IJAF10407
Author Name
:
Tanushree Mazumdar
Availability
:
YES
Subject/Domain
:
Finance
Download Format
:
PDF Format
No. of Pages
:
16
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Description
Stock markets in India were opened to foreign capital flows in 1992, with its ramifications (both positive and negative). This paper examines two consequencesliquidity (positive) and volatility (negative)in the past decade on the Indian stock market(s). It finds that Foreign Institutional Investment (FII) flows have enhanced liquidity of the Indian stock market. Stock market liquidity is definitely higher post-liberalization. There is not much evidence to support the hypothesis that FII inflows have led to volatility in the returns in the Indian stock market(s). The paper uses Engel-Granger test of co-integration to examine the impact of FII inflows on the Indian stock markets.
Keywords
FII Inflows to India: Their Effect on Stock Market Liquidity and Volatility, FII Inflows, Stock Market, Liquidity,Volatility,Foreign Institutional Investment, post-liberalization,Indian stock market(s),volatility,Indian stock markets.
