 Finance Constraints and Firm Transition in the Informal Sector: Evidence from Indian ManufacturingRajesh Raj and Kunal Sen Oxford Development Studies, 2015, vol. 43, issue 1, 123-143 Abstract: This paper focuses on the role of finance constraints in determining the lack of transition of firms in India from very small family firms, which are the predominant type of firms in the informal sector, into larger informal firms that employ non-family labour. Using a rich firm-level data-set drawn from nationally representative surveys of the Indian informal manufacturing sector, this paper tests for the role played by finance constraints in firm transition in the informal sector at the firm and district level. There is evidence that the difficulty that firms face in accessing external finance acts as a significant constraint to small firm growth in the informal sector. Looking at data from India's districts, it is found that the financial development in a given district increases the likelihood that firms in the district will make the transition from household enterprises into non-household enterprises. Date: 2015 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:oxdevs:v:43:y:2015:i:1:p:123-143 Ordering information: This journal article can be ordered from DOI: 10.1080/13600818.2014.972352 Access Statistics for this article Oxford Development Studies is currently edited by Jo Boyce and Frances Stewart More articles in Oxford Development Studies from Taylor & Francis Journals |
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