Short-run market integration cannot be subsumed within the long run, since the money market is essentially for enabling the liquidity needs, through short term credit instruments. Through Ravallion (1986) tests we have examined short-run market integration of Money Market in India, including testing for the ‘central market hypothesis’. We find that the sub-markets are not segmented. Therefore, it can be expected that information flows lead to price adjustments across sub-markets of the money market. Second, arbitrage possibilities do not exist. On the whole we conclude that the money market in India displays short-run market integration.
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