Business groups, financing constraints and investment: the case of India

Robert Lensink, Remco Van der Molen () and Shubashis Gangopadhyay

Journal of Development Studies, 2003, vol. 40, issue 2, 93-119

Abstract: We examine the effect of business group affiliation on corporate investment behaviour in India. More specifically, we test whether group affiliation reduces financing constraints for the affiliated firms. We use a data set containing 694 listed Indian companies for the 1989-97 period. We estimate a simple investment equation and find evidence that the investment-cash flow sensitivity is much lower for group affiliates. This suggests that business group affiliates have better access to external funds than stand-alone firms.

Date: 2003
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Working Paper: Business groups, financing constraints, and investment: the case of India (2002)
Working Paper: Business groups, financing constraints, and investment: the case of India (2001)
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DOI: 10.1080/00220380412331293787

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