Financing Firms in India

Franklin Allen, Rajesh Chakrabarti, Sankar De, Jun Qian and Meijun Qian
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Franklin Allen: University of PA
Rajesh Chakrabarti: Indiand School of Business, Hyderabad
Sankar De: Indian School of Business, Hyderabad
Jun Qian: Boston College

Working Papers from University of Pennsylvania, Wharton School, Weiss Center

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 non-bank, non-market sources, and generally backed by non-legal 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.

JEL-codes: G00 K00 O50 (search for similar items in EconPapers)
Date: 2011-12
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Related works:
Journal Article: Financing firms in India (2012)
Working Paper: Financing firms in India (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:upafin:12-01

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