Predictive Optimized Model on Money Markets Instruments With Capital Market and Bank Rates Ratio

Paper: arXiv 2303.10481

Authors: Bilal Hungund, Shilpa Rastogi

Abstract

The money market and the capital market of the Indian financial markets have a symbiotic relationship in the development of the Indian economy. The nature and the characteristics of the markets differ to a large extent as the money market ensures liquidity in the system through the monetary policy by the regulators; capital markets propel and act as the engine driver for the economy in the long term. Therefore, the final throughput of the economy is the aggregation of the output of both the markets. Does that imply that the development of both markets is parallel in nature or is any one superior to the other or are they competitors? To understand the influence of one over the other the research was undertaken through a correlation matrix and time series model. A predictive model was further constructed for predicting the volume of money market instrument on the basis of fourteen days historical.

Complexity vs Empirical Score

• Math Complexity: 3.5/10
• Empirical Rigor: 4.5/10
• Quadrant: Philosophers — conceptual discussion, limited math and data

Why this score: The paper explores the relationship between Indian money and capital markets using basic correlation matrices and a simple 14-day historical time-series predictive model. It lacks advanced mathematical rigor, novel methodological contributions, and robust backtesting standards expected in modern quantitative finance literature.

Research Flowchart

  flowchart TD
    A["Research Goal: Analyze Money vs. Capital Market Relationship & Predict Volume"] --> B["Data Inputs: 14-Day Historical Money Market Instruments, Bank Rates & Capital Market Ratios"]
    B --> C["Correlation Matrix Analysis"]
    B --> D["Time Series Modeling"]
    C --> E["Predictive Model Construction"]
    D --> E
    E --> F["Outcomes: Verified Market Interdependence & Money Market Instrument Volume Forecasts"]