IMPACT OF INVESTMENTS IN INDIAN EQUITY MARKET ON BANK SAVINGS- A STUDY

Abstract

Investment in capital market are influenced by the bank interest rates .in the recent times global markets got influenced by the Fed interest rate change because of flow of funds are largely depends on the risk level of investment. The present study has been emphasized on monetary policy key rates and inflation influence on bank deposits and equity market movement .in this analysis data has been considered from 2000 to 2015.

Bivariate correlation result indicates that liquidity, deposits and equity market are having negative correlation with inflation. Weight least square model proved that interest rates are not influencing on liquidity and bank deposits. Granger causality test has been applied and result reveals that inflation is granger causing the repo rate but it is failed to influence the equity markets. The T-test hypothesis has been rejected and proved that the interest rate influence on bank deposits and equity market capitalisation.VAR model predicted that bank deposits are expected to move upside in near future. This analysis is useful to capital market investors, mutualfunds, pension funds and foreign investors.

Various research thesis and article were focused on banking deposits impact on economy. No research has analysed how savings bank deposits will have influence on equity market investments in India. Investors normally will be attracted by the higher interest rates offered by the banks, but how the market capital is fluctuating with the ups and downs of interest rate changes. My study will be emphasized to measure the structural movement's equity capital when the interest rates are getting changed