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Defects OF Indian Money Market
Economics
University of Calcutta
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DEFECTS OF INDIAN MONEY MARKET
Despite the many advantages of the Indian money market, it still faces several defects that can hinder its efficient functioning. Here are some of the defects of the Indian money market: 1. Lack of Depth: The Indian money market lacks depth, which means that it does not have enough active participants or volumes of transactions. This can lead to liquidity issues and limit the availability of short-term funds for market participants. 2. Concentration: The Indian money market is highly concentrated, with a few large participants dominating the market. This concentration can lead to oligopolistic behavior, and it can limit competition, which can negatively impact market efficiency. 3. High Transaction Costs: The transaction costs in the Indian money market are relatively high due to various factors, such as taxes, stamp duty, and brokerage fees. High transaction costs can discourage market participation and limit the market's growth potential. 4. Lack of Transparency: The Indian money market lacks transparency, with limited access to reliable and up-to-date information on market conditions and
pricing. This can make it difficult for market participants to make informed decisions and can lead to information asymmetry. 5. Inadequate Infrastructure: The Indian money market lacks adequate infrastructure, such as trading platforms and settlement systems. This can lead to delays in transactions, inefficient pricing, and limited access to market information. 6. Limited Investor Base: The Indian money market has a limited investor base, with most of the market participants being institutional investors. The limited investor base can result in low demand for financial instruments, which can limit the market's growth potential. In conclusion, the Indian money market faces several defects that can hinder its efficient functioning. Addressing these defects will require the implementation of various reforms, such as improving market infrastructure, increasing transparency, reducing transaction costs, and diversifying the investor base.
Defects OF Indian Money Market
Course: Economics
University: University of Calcutta
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