THE DIRECT COSTS OF FINANCIAL REPRESSION - EVIDENCE FROM INDIA

This paper provides evidence that suggests that financial repression h as substantial direct effects on financial development, independently of its well-known influence through the level of the real interest rat e. It also demonstrates that the process of economic growth is not wea kly exogenous with respect to financial development. Thus financial re pression may impose real costs that are additional to those suggested by previous empirical studies.