Subash Sasidharan

The objective of this paper is to examine the relationship between the central bank's daily money market operations in the form of Term Repo and Term Reverse Repo operations on stock returns using daily data. Unlike earlier studies, we use two new monetary measures, namely, Repo Spread and Reverse Repo Spread. Controlling for firm-specific factors and time dummies and addressing endogeneity issue, we show that the central bank's money market operations have a significant effect on daily returns. Further, we also observe that the inclusion of these monetary variables improves the prediction of the stock returns.

The decision to undertake investment in innovative activities is an important strategic choice made by firms. This study investigates the relationship between business group (BG) affiliation and research & development (R&D) activities of Indian firms. Using an empirical approach that accounts for endogeneity and selection bias, we observe that BG affiliation has significant positive influence on the sample firms’ R&D activities. Employing various proxies for institutional development, we show that the effect of BG affiliation on R&D declines with the improvements in institutional and regulatory mechanisms. Further, this study explores the linkages between diversification strategies at the group level and R&D investments by firms affiliated with BGs. Results show that degree of related diversification is positively associated with the affiliates’ innovation efforts.

We examine the role of innovation on the export market survival of Indian manufacturing firms. To achieve this objective, we source information on 1424 firms from the CMIE-Prowess database over 2001–2018. We find that firms investing in R&D experience a lower probability of exiting from export markets. In addition, multiple sub-sample analyses indicate the significance of R&D for small and medium firms export market survival. The findings are robust to endogeneity concerns.

We analyze the role of digital infrastructure in shaping the global value chain (GVC) participation of Indian manufacturing firms. To examine the digitalization and GVC nexus, a rich, firm-level, unbalanced panel of 4875 manufacturing firms from the past two decades is used to detail the rising significance of digital infrastructure in the Indian context and then to examine empirically the relationship between digitalization and GVCs. Employing a logit model, we observe a positive and significant association of digitalization on firms’ GVC participation. Further, subsample results highlight that digitalization promotes the integration of small firms and firms from low-technology industries into the GVC. Moreover, the findings of our analysis are robust to alternate measures of GVCs.

Sustainable Development Goal 6.1 is “to achieve universal and equitable access to safe and affordable drinking water for all”. To measure affordability of accessing clean water, coping cost approach has been adopted, and this paper contributes to the burgeoning empirical literature on measuring affordability. The objective of this paper is to estimate coping costs related to the erratic, unsafe, and inadequate water supply in the metropolitan area of Chennai, India. Based on the data collected from 423 households, we find that households in Chennai city resort to five main types of coping behaviors: collecting, pumping, treating, storing, and purchasing. We employ the multiple regression with robust errors, to estimate the determinants of the coping costs. We obtain the mean coping costs as INR (Indian Rupee) 553, and INR 658 per month for piped and non-piped households in this sample. For non-piped households, collection costs (time costs in traveling and queuing for collecting water) constitute 22% of the coping costs, while collection costs for piped households are less 2% of the coping costs. One interesting finding is the variation of coping costs with household income—these costs are roughly 1% of income for the high income households to as high as 15% for the low income households. The results outline the need of policy intervention to enhance affordability.

Using the recently released microdata covering input use in Indian agriculture, this study analyzes the relation between value and fertilizer consumption along with four layers of explanation. These layers include factors of production, knowledge capital, social identity, and human capital for both agricultural seasons. Subsequently, the study also examines the propensity to use diverse channels of information. This study uses both regression and machine learning methods for analysis. The main finding of the study is that fertilizer use is directly associated with the value of production. However, the propensity to use fertilizer is the highest for the lowest quantile. Moreover, fertilizer use is a positive covariant of select information sources. Further, similar to tangible resources, the study observes that information plays a crucial role in fertilizer use. Information channels such as extension services have a pivotal role in promoting sustainable farming, especially among marginal farms.

In this article, we study the role of servicification in sustaining global value chain participation. To empirically analyse the role of firm servicification on GVC survival, we draw information from a sample of 1,227 Indian manufacturing firms over 2001–2018. We use a complementary log–log model and find that higher servicification is associated with a lower hazard rate. Moreover, we account for the reverse causality in the model using a two-stage residual inclusion method and correct for self-selection using the propensity score matching estimator. Our finding of servicification aiding GVC survival remains robust to the endogeneity concerns. Further, our analysis also underscores the importance of servicification for sustaining GVC participation for firms with short-trading spells.

This paper examines the role of outward foreign direct investment (OFDI) by Indian firms on domestic firms' R&D using unique firm-level data for 2008–2018. While correcting for endogeneity arising from the sample selection, we apply panel data models to evaluate the OFDI and domestic R&D nexus. Our empirical analysis highlights the presence of positive impact of OFDI on the firm's decision to undertake R&D activities. Further, we find that irrespective of the mode of OFDI, i.e., both wholly-owned subsidiaries and joint ventures encourages firms to participate in R&D activities. However, only OFDI in the form of wholly-owned subsidiaries increases the R&D intensity of the parent firms' R&D activities.

This paper investigates the relationship between the volatility of government bond yields and liquidity using daily data. We introduce a novel measure of liquidity called Repo Spread created from Reserve Bank of India's recent liquidity operation called Term Repo Operation. The result indicates that liquidity variable has significant explanatory power on the volatility of security yields. Further, we find Repo Spread has significant predictive power on the volatility of government security yields.

Scholars have suggested that externalities such as technology spillovers to domestic firms from the entry and presence of foreign firms – i.e., Foreign Direct Investment (FDI) spillovers – arise only when domestic firms possess adequate absorptive capacity. But they have also maintained a predominantly technological focus in their conceptualization of absorptive capacity, treating it mostly as a function of domestic firms' technological investments. Yet, several anecdotes point to finance constraints being equally important hurdles to absorbing technology. Given the comparatively scant attention to finance constraints in the FDI spillover literature, we present theoretical arguments and a counterfactual simulation for how finance constraints influence firms' realization of FDI spillovers. In the process, we identify two mechanisms underlying why firms facing high finance constraints experience lower FDI spillovers. (125 words).