Nonresident Deposits in India: In Search of Return?
March 1, 2004
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Summary
This paper analyzes trends in the accumulation of NRI (nonresident Indian) deposits and investigates the determinants of these inflows. It finds that monthly deposit flows have been quite stable since the 1991 crisis; nevertheless, there have been occasions when monthly flows turned negative in the short run, coinciding with adverse domestic or external events. Econometric analysis shows that the NRI deposits are influenced by standard risk and return variables. In particular, NRI deposits respond positively to changes in relative interest rates on NRI deposits and LIBOR; negatively to political and geopolitical uncertainties, such as the government resigning in mid-term, and tensions on India's borders; and negatively to adverse external events, such as the Asian crisis.
Subject: Bank deposits, Deposit rates, Exchange rate risk, Financial regulation and supervision, Financial services, Interbank rates, Oil prices, Prices
Keywords: Asia and Pacific, Bank deposits, Capital Flows, deposit flow, Deposit rates, Exchange rate risk, flows During Specific Events, foreign currency, Foreign Currency Deposits, India, Interbank rates, Nonresident Deposits, NRI deposit, NRIs, NRNR deposit, Oil prices, rupee deposit, WP
Pages:
28
Volume:
2004
DOI:
Issue:
048
Series:
Working Paper No. 2004/048
Stock No:
WPIEA0482004
ISBN:
9781451846768
ISSN:
1018-5941
