DETERMINANTS OF LIQUIDITY AND INTEREST RATES: SOME RESULTS FOR INDIA DURING 1990-2005

This article aims at finding out the possible determinants of liquidity and subsequently interest rate. Global as well as Indian scenario is fast changing in the finance sector. Oil prices are rising. Fed rate is increasing moderately in the US. FII and FDI funds are flowing to India in abundance. This study is centered on understanding the ‘friction’ or the ‘push’, these items may have, on the overall liquidity. It also tries to find an answer to whether they have any effect on interest rate or not.