The Role of Technology and Regulations in Capital Flow to India

• Main Authors: Nisha Goel, Gurinder Singh
• Format: Article
• Language: English
• Published: University of Wollongong 2018-06-01
• Series: Australasian Accounting, Business and Finance Journal
• Subjects: Technology; Regulation; Indian Market; Capital Inflows.
• Online Access: http://ro.uow.edu.au/aabfj/vol12/iss2/6

The economic reforms initiated in India in 1990, have opened greater avenues to attract foreign funds into the Indian stock market. The Indian Economy shows more potential for development as compared to other developing economies which is the reason that India is mostly picked up by foreign investors for capital investments. An attempt is being made in this paper to analyse the role of technology in capital flow and also to examine the relationship between regulation and capital flows to India. The monthly data of the variables have been taken for the study and the reference period used in the study is January 2006 to December 2017. The data is processed on EViews 9. The descriptive statistics have been utilized to outline the general pattern and trend of the dataset. For checking the stationarity of the data Augmented Dickey-Fuller test is used. After the ADF test, Johansen Co-integration test is applied to verify the existence of long-run interrelationships and integration among the variables. In the study, regression is also applied to have more predictability about the relationship between different variables. It is found in the study that there has been a positive effect of the regulation policies which are being made in India as well as the technological developments which are happening in India over the period as not only flow of FDI is increasing, but the NSE Index Price is also showing a positive momentum in the study. Therefore it can be said that role of technology in capital flow to India has become increasingly important as it helps the country to invite more and more capital flows to India and thereby have more growth and development in the financial system as well as the whole economy.