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No. 381






Foreign Capital Flows, Financial Openness and Stock Market Volatility in Nigeria

Eseoghene Joseph IDOLOR**

Understanding the relationship between capital , financial openness and the level of stock market volatility is essential in designing an effective policy framework to manage volatile capital flows and their disruptive potential. This research paper was designed to examine the effects of financial openness and foreign capital flows on stock price volatility in Nigeria between 1986-2010.

Financial openness is measured as the ratio of the sum of foreign assets and liabilities to GDP in Nigeria; and both foreign direct investment (FDI) and foreign portfolio investment (FPI) are included in the capital inflow factor. The study utilised a model with a first order EGARCH term and a first-order ARCH term (EGARCH [1, 1]) because of its simplicity. The results obtained from our data analysis indicates that foreign capital flows and financial openness do not effectively predict volatility of stock market prices in Nigeria.

However, both financial openness and foreign direct investment have positive signs which imply that these factors tend to stimulate or intensify stock price instability in the market at a very weak level. Also the results further indicates that rising foreign financial participation does not seem to expose the Nigerian stock market more to vagaries neither do they convey easy amplification of short term disequilibrium that may come up in the capital market.

On the basis of our findings, the government and indeed capital market regulators are advised to further open up the market and economy to more capital inflows needed for economic and industrial development; most especially as the empirical results show no sign of an increase in the vagaries of the market due to rising foreign capital flows. Investors are also advised to hedge against stock price volatilities by constructing highly diversified portfolio's which reflects the overall market portfolio. Furthermore, we recommend better institutional policy framework and infrastructure to better capture and attract more capital inflows into Nigeria.

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Urban Sustainable Transportation Development: A case of West Bengal

Atanu Sengupta*
Asish Kumar Pal**

Urbanization is a fact of life in underdeveloped countries. With urbanization comes, the problem of urban transport and mobility. There are various aspects of the urban transit problem. In this paper we are concerned with sustainable transportation system as one that meets three criteria. First, it must be ecologically sustainable, maintaining transport-related pollution levels below those that human beings can safely tolerate and that the environmental carrying capacity can allow. Second, the system must be financially sustainable so that it does not require significantly higher expenditures for operation, maintenance, nor carrying charges higher than what its users can pay.

Finally, the system should be socially sustainable, providing each member of society with the means for attaining fundamental social, cultural, education and economic essentials. All these problems are interrelated and they often reinforce upon one another. The analysis was made both with reference to India as well as West Bengal- a major Indian state. Our analysis brings out certain interesting policy suggestions that may be important to mitigate the problem and bring in sustainable urbanization.

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Impact of Crop Insurance on Use of Fertilizer and Irrigation: A Case Study of Hooghly District

Maniklal Adhikary*
Sk. Tibul Hoque**

This study examines the impact of crop insurance on irrigation and fertilizers in the district of Hooghly, West Bengal. The conventional idea states that farmers, who purchase crop insurance policy, tend to use chemical fertilizers relatively more than the uninsured farmers. In this analysis we observe that the average consumption and growth rate of total and per acre intake of fertilizer (chemical NPK) have been significantly increased in crop insurance regime (2000-01 to 2009-2010) for all crops under our study district. In case of winter rice, namely Boro paddy, the growth rate of total and per acre NPK utilization has been found to be highest followed by Potato and Aman Paddy. But the consumption of both aggregate and per acre trend of chemical fertilizers is the highest for commercial crop during the insurance regime.

As a result, the trend lines of total and per acre consumption of NPK for Potato lie above than that of both Paddy. Overall, the positive trend of fertilizers consumption adversely affects the environment (Horowitz and Lichtenberg, 1993) and worsens the quality of ground water (Wu, 1999). It becomes harmful to animal and human health (Wu, 1999). It has been also noticed that the growth rate of irrigated land with increase in total area under irrigation increased significantly due to crop insurance.

  • * Professor of Economics, The University of Burdwan, Golapbag, Burdwan, West Bengal-713104 India
  • ** Assistant Professor of Economics, Department of Law, The Aligarh Muslim University (Centre; Murshidabad) Vill. & P.O. - Jangipur Barrage P.S. - Suti, Dist-Murshidabad, West Bengal-742229, India

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Socio-Economic Determinants of Women Empowerment in India: Case of the Sub-National Economy of Uttar Pradesh

Manoj Kumar Agarwal*

Issue of women empowerment has been gaining momentum fast globally. The issue is being taken up in India and even at the sub-national level. We here take up the case of the most populous state of Uttar Pradesh. It has been economically backward state of India and it also shows unfavorable position of women. Realizing the significant role of women in the state, we make efforts to develop Women Empowerment Index (WEI) for the state and 70 districts of Uttar Pradesh for 2001. While realizing the constraints of the quality and availability of data, I have tried to incorporate various important features like literacy, work participation, political role and sanitation. The index prepared so leads to very complex type of inferences that also gives an impression which might be shown by a transitive society and the economy.

Poorer districts with low paid employment and marginalization of the women workers have shown higher WEI. These have also relatively better sex ratio. Economic development, shown through per capita income, does not seem to improve the situation in a decisive manner.

"We need a measure", Mahbub demanded, "of the same level of vulgarity as GNP—just one number—but a measure that is not as blind to social aspects of human lives as GNP is." Mahbub hoped that not only would the HDI be something of an improvement on—or at least a helpful supplement to—GNP, but also that it would serve to broaden public interest in the other variables that are plentifully analysed in the Human Development Report

Aniartya Sen, 1999, p. 23

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Factors Affecting Interest Rate Structure in India: An Application to VECM Approach

Moninder Kaur*

The paper investigated the role of domestic and external factors in determining the interest rates in India. The study used quarterly data during the period June 1996 to March 2012. The model was estimated using Vector Error Correction Mechanism (VECM). The empirical estimates show that a long- run relationship exists between interest rate which is proxied by 91-days treasury bill rate and real gross domestic product, real money supply, foreign interest rate and exchange rate. Futhermore, the results of VECM model shows that the coefficient of error correction term was found to be statistically significant at 1 % level of significance and negative, which complies with the theoretical expectation. In addition, all the hypothesized determinants exercised a significant influence on the treasury bill rate both in the short-run and supply and exchange rate have exerted negative impact on treasury bill rate, foreign interest rate has the positive impact. The general conclusion that can be derived is that not only domestic factors like real GDP and real money supply are sole determinants of interest rates, but also the external factors do play a significant role in the determination of interest rates.

  • *Senior Research Fellow (U.G.C.), Punjab School of Economics, Guru Nanak Dev University, Amritsar-143005.

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Welfare Aspects of Agricultural Growth: Analysis based on Foodgrains Cultivation in India

Chandan Kumar Maity*
Atanu Sengupta**

This article attempts to analyse welfare aspects of growth by using Kakwani's (1991, 1997) growth parameters. Based on the aggregated state level data on area production and yield on total foodgrains in India, the study reveals considerable variations in state wise growth rates. The picture is mixed one. Some states show an acceleration, other deceleration or stagnancy. As for convergence there are both catching up and falling behind. However, the entire analysis is positive. We also capture the normative approach of growth delving deeply into the relationship between long run and short run growth. A short period analysis would help us to unravel the welfare complexity behind the growth dynamics in Indian agriculture.

  • * Research Scholar, Burdwan University, West Bengal.
  • ** Associate Professor, Burdwan University, West Bengal.

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Modelling Volatility of Indian Rupees vis-a-vis US Dollar in Stagflation-like Situation of 2012

Soubarna Pal*

I have modeled the volatility of Indian rupees vis-a-vis US Dollar in a stagflation-like situation of India in 2012 [using weekly data from January 2012 to December 2012). I have found that the news about volatility from previous periods have an explanatory power on current volatility. The sum of the two estimated ARCH and GARCH coefficients a +/? (persistence coefficient) is larger than one, suggesting that conditional variance is an explosive process for this period.

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