Professors Dhammika Dharmapala and Vikramaditya S. Khanna have posted a working paper titled “Stock Market Reactions to India’s 2016 Demonetization: Implications for Tax Evasion, Corruption, and Financial Constraints”, the abstract of which is as follows: On November 8, 2016, the Indian government made a surprise announcement that certain currency notes (representing 86% of the currency...
Miscellaneous
1. Put Options & Foreign Exchange Regulations We have in the past discussed the questions regarding the enforceability of put and call options under securities laws and regulations, primarily the Securities Contracts (Regulation) Act, 1956. In addition, if put options are entered into by foreign investors, the Foreign Exchange Management Act, 1999 and regulations issued by the Reserve Bank of...
The Currency Conundrum
The financial press has been abuzz with discussions and commentaries on the recently initiated “currency war”. While much of the discussion is deeply embedded in macro-economics, the Critical Twenties blog has a useful overview of the tricky issues involved and their possible impact on the Indian economy, written in a manner that is palatable to the non-economist.
The Impact of Tightening Financial Regulation
The last week has witnessed tighter financial regulations emerging out of the U.S. and European markets. While some of the reforms are expected to result in migration of investments into more liberal markets in Asia (including India), others represent introduction of stringent measures that are already in place in India. Possible Regulatory Arbitrage First, the European Union finance ministers...
Recent proposals for a Tobin Tax
Recently, the UK government proposed the levying of a ‘Tobin tax’ or a financial transactions tax to recover the cost of bailouts in recession situations. The proposal has not won many supporters; indeed, India is one of the countries which has opposed the tax. Despite initial rejections of the idea, the IMF is said to be considering the implications of such a tax. Named after the economist James...
Financial Crisis, Economics and Regulation
There is a recent assortment of interesting columns regarding the financial crisis, the role that regulation (or the lack thereof) has played in the exacerbation of the crisis, and the various economic instruments utilized by policy makers to rein in the crisis. The following is a list of these readings: 1. Beyond the crisis by Subir Gokarn in the Business Standard.2. Financial Regulation –...
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