Financing firms in India
Franklin Allen,
Rajesh Chakrabarti,
Sankar De,
Jun Qian and
Meijun Qian
Journal of Financial Intermediation, 2012, vol. 21, issue 3, 409-445
Abstract:
With extensive cross-country datasets and India firm samples, as well as our own surveys of small and medium firms, we examine the legal and business environments, financing channels, and growth patterns of different types of firms in India. Despite the English common-law origin and a British-style judicial system, Indian firms face weak investor protection in practice and poor institutions characterized by corruption and inefficiency. Alternative finance, including financing from all nonbank, nonmarket sources, and generally backed by nonlegal mechanisms, constitutes the most important form of external finance. Bank loans provide the second most important external financing source. Firms with access to bank or market finance are not associated with higher growth rates. Our results indicate that bank and market finance is not superior to alternative finance in fast-growing economies such as India.
Keywords: India; Banks; Markets; Alternative finance; Small and medium enterprises; Growth (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (71)
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Working Paper: Financing Firms in India (2011) 
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:21:y:2012:i:3:p:409-445
DOI: 10.1016/j.jfi.2012.01.003
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