 Drivers of corporate investment in India: The role of firm-specific factors and macroeconomic policyPravakar Sahoo and Ashwani Bishnoi Economic Modelling, 2023, vol. 125, issue C Abstract: India's investment slowdown has proved detrimental to India's growth trajectory. Prior literature has addressed the investment slowdown at macro and micro levels; however, the asymmetric effect of firm-specific variables on India's investment drivers has been overlooked. This study attempts to bridge the gap by employing firm-level data from 2001 to 2019. The findings reveal that the investment slowdown has been asymmetric with respect to the firm size and leverage, particularly in the construction, mining, and service sectors. Furthermore, this study finds that the positive impact of a higher leverage rate on investment is offset amidst a tight monetary phase stance. Nevertheless, the investment rate of over-leveraged firms has slowed because of higher interest payments and increased retained earnings. This leverage impact intensified during a contractionary monetary policy phase. In addition, Tobin's Q emerges as relevant only for investments related to firms in the sectors of manufacturing and nonfinancial services. Keywords: Corporate investment; India; Over-leverage; Monetary policy; Economic uncertainty (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:125:y:2023:i:c:s0264999323001426 DOI: 10.1016/j.econmod.2023.106330 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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