Publication

This paper explains how, following the collapse of Lehman Brothers in September 2008, the global liquidity crisis affected the Indian financial market adversely. According to the authors, this was largely due to the sudden and large scale reversals of the foreign institutional investments from the Indian market. They argue that bank lending will always remain an important source of finance for small and medium sized enterprises that may not be able to access alternative sources of borrowing, and that during the period of acute global risk aversion and distress, domestic banks in India have been a critical source of financing even to large corporates that might ordinarily be able to raise funds in the international capital markets.