Determinants of Capital Structure in India (1990-1998): A Dynamic Panel Data Approach

Basudeb Guha-Khasnobis () and Saumitra Bhaduri
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Basudeb Guha-Khasnobis: The United Nations University, Postal: World Institute for Development Economics, Research. The United Nations University, Katajanokanlaituri 6B, Helsinki 00160 Finland

Journal of Economic Integration, 2002, vol. 17, 761-776

Abstract:

Conventional wisdom on capital structure choices has been by and large confined to the United States and a few advanced countries having institutional similarities. In this paper we make an attempt to provide some insight into the capital structure choice of developing countries through a case study of the Indian corporate sector. We develop a dynamic panel data model that explicitly takes into account the possibility of adjustment cost to reach optimal capital structure. The results suggest that restructuring cost is important in adjustment towards an optimal capital structure. We identify the key determinants of the speed of adjustment towards optimal capital structure and also highlight important differences across cohorts formed on the basis of firm-specific attributes.

Keywords: Capital Structure; India; Panel Data; Adjustment Cost (search for similar items in EconPapers)
JEL-codes: E44 G32 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0219

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