This paper examines the impact of financial sector liberalization measures on the household saving rate in India by constructing a financial sector liberalization index for past decades.
The index's impact is estimated using a general model, which aims to include other determinants of household savings as well.
The results suggest significant negative repercussions on the household saving rate.
This can be directly linked to increased credit availability as a result of the liberalization of the financial sector, which enhances public consumption rather than public savings.
Among other determinants, absolute income is the most important positive factor influencing the household sector saving rate in India at the time of this study.
Lekshmi Rajasekharan Nair is currently pursuing her PhD at CDS Trivandrum, Kerala, India. The article is part of her Master of Philosophy thesis. It was first published on the United Nations Public Administration Network, Asia Pacific Centre Website e LIBRARY.
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