Presently, CAF is conducting the following research tracks, each of which is expected to generate a series of inter-linked studies. All of these researches are conducted together by resident researchers and fellow scholars based at foreign institutions.
Recent finance research trends indicate a focus on study of stock market behaviour of various groups of investors to understand how different kinds of cognitive biases influence their market decisions. CAF is currently undertaking several research projects in this area. The objective of one of the projects is to determine what motivates individual investors to trade. This research uses data supplied by the National Stock Exchanges (NSE) of India. Research team: Sankar De (ISB), Naveen Reddy (ISB), Bhimasankaram Pochiraju (ISB), Rahul Chhabra (ISB), Saptarshi Mukherjee (ISB) and Subrata Sarkar (IGIDR and ISB).
There has been a large amount of research done on the relation between growth and inequality and also on the relation between financial development and growth. But there is little research on the effects of financial development on economic inequality. The general finding is that growth increases inequality in the early stages of development and reduces it in the later stages. Examining financial development may help in understanding how growth affects inequality, which is important for policy purposes. If financial development aids growth primarily by benefitting incumbents, then inequality will increase. If, on the other hand, financial development aids growth by relaxing financial constraints of the poor and small firms, then inequality will decrease. Thus the objective of this research is to understand the process of how financial development aids growth, with a view to collate the research on finance, inequality and growth. It aims at identifying the specific channels through which financial development affects growth and will provide important policy guidelines with macroeconomic implications. Research team: Sankar De (ISB), Subrata Sarkar (IGIDR and ISB,) Manpreet Singh (ISB) and Siddharth Vij (ISB).
The objective of this research is to improve upon the existing methods of estimation of autocorrelation structure of errors for an individual over time so that the regression coefficient estimates and their standard errors can be estimated more precisely than currently feasible. The research also considers more general situations than the existing methods allow, such as when there are two or more random regressors in the presence of some non-random regressors (as is commonly encountered in empirical investigations).Research team: Sankar De (ISB), Mohit Dayal (ISB), Naveen Reddy (ISB), and Bhimasankaram Pochiraju (ISB)
The thrust of this research was to know more about the financial patterns, constraints and challenges faced by SME units as this is relatively unknown, although these units occupy an important position in the financial hierarchy in India.CAF has conducted two surveys of SME units across India to obtain reliable data for research. Research findings indicate that the average SME unit faces credit rationing in both formal as well as informal markets in India. Research team: Sankar De (ISB), and Manpreet Singh (ISB)
The objective of this research is to examine the legal and business environments, financing channels and governance mechanisms of different types of firms in India, and compare them to those in other countries. The first paper from this research is now among the top ten downloads at Social Science Research Network (SSRN), and has been presented at many international research forums and business schools around the world. Research Team: Franklin Allen (Wharton), Rajesh Chakrabarti (ISB), Sankar De (ISB), Jun Qian (Boston College) and MeijunQian ( National University of Singapore).