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How do Banks Influence Firm Capital Structure? Evidence from Indian Data

Saibal Ghosh

Indian Economic Review, 2015, vol. 50, issue 1, 1-24

Abstract: Employing data on publicly listed manufacturing firms for the period 1996-2012, the paper examines the interrelationships among leverage, debt maturity and source of debt. The evidence indicates that these three variables are interrelated, with each tending to complement or substitute the other. Disaggregating firms on the basis of equity and board presence, we find that the effect of leverage on debt maturity is the highest for firms that do not exhibit close relationships with banks. Additionally, having no seat on the firm board makes it difficult for banks to exercise control over the firm’s indebtedness.

Keywords: Bank Debt; Asymmetric Information; Leverage (search for similar items in EconPapers)
JEL-codes: E44 G21 G32 (search for similar items in EconPapers)
Date: 2015
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Indian Economic Review is currently edited by Pami Dua (Editor) & Ram Singh (Associate Editor) and Sunil Kanwar

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