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
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (75)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1042957312000046
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Financing Firms in India (2011)
Working Paper: Financing firms in India (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

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

Access Statistics for this article

Journal of Financial Intermediation is currently edited by Elu von Thadden

More articles in Journal of Financial Intermediation from Elsevier
Bibliographic data for series maintained by Catherine Liu ().