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Financial liberalisation and Capital structuring decisions of corporate firms: Evidence from India

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  • Jadiyappa, Nemiraja
  • Vanga, Nagi Reddy
  • Krishnankutty, Raveesh

Abstract

We examine the impact of financial reforms on corporate financing decisions of Indian firms using the fixed effects panel estimator. The impact on the leverage and debt maturity ratio is negative while a positive effect is observed on debt specialisation. The impact is greater for priority firms compared to non-priority firms.

Suggested Citation

  • Jadiyappa, Nemiraja & Vanga, Nagi Reddy & Krishnankutty, Raveesh, 2016. "Financial liberalisation and Capital structuring decisions of corporate firms: Evidence from India," Economics Letters, Elsevier, vol. 149(C), pages 33-37.
    • Handle: RePEc:eee:ecolet:v:149:y:2016:i:c:p:33-37
    DOI: 10.1016/j.econlet.2016.10.004
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    2. Ms. Enrica Detragiache & Mr. Gianni De Nicolo & Ms. Senay Agca, 2007. "Financial Reforms, Financial Openness, and Corporate Borrowing: International Evidence," IMF Working Papers 2007/186, International Monetary Fund.
    3. Marianne Bertrand & Antoinette Schoar & David Thesmar, 2007. "Banking Deregulation and Industry Structure: Evidence from the French Banking Reforms of 1985," Journal of Finance, American Finance Association, vol. 62(2), pages 597-628, April.
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    5. Abdul Abiad & Enrica Detragiache & Thierry Tressel, 2010. "A New Database of Financial Reforms," IMF Staff Papers, Palgrave Macmillan, vol. 57(2), pages 281-302, June.
    6. Barclay, Michael J & Smith, Clifford W, Jr, 1995. "The Maturity Structure of Corporate Debt," Journal of Finance, American Finance Association, vol. 50(2), pages 609-631, June.
    7. Joshua D. Rauh & Amir Sufi, 2010. "Capital Structure and Debt Structure," The Review of Financial Studies, Society for Financial Studies, vol. 23(12), pages 4242-4280, December.
    8. Demirguc-Kunt, Asli & Maksimovic, Vojislav, 1999. "Institutions, financial markets, and firm debt maturity," Journal of Financial Economics, Elsevier, vol. 54(3), pages 295-336, December.
    9. Adrian Blundell-Wignall & Frank Browne, 1991. "Macroeconomic Consequences of Financial Liberalisation: A Summary Report," OECD Economics Department Working Papers 98, OECD Publishing.
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    Cited by:

    1. Anh‐Tuan Doan & Bich‐Thanh Truong & Chi‐Cuong Nguyen & Phan‐Tam‐Nhu Nguyen & Hai‐Yen Truong & Anh‐Tuan Le, 2023. "Corruption and corporate leverage in an emerging economy: The role of economic freedom," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(2), pages 599-629, June.
    2. Jadiyappa, Nemiraja & Joseph, Anto & Sisodia, Garima & Krishnankutty, Raveesh & Shrivatsava, Santosh, 2021. "Corporate social responsibility and cash holdings in India: Evidence from a natural experiment," Finance Research Letters, Elsevier, vol. 39(C).
    3. Sarfraz Hussain & Van Chien Nguyen & Quang Minh Nguyen & Huu Tinh Nguyen & Thu Thuy Nguyen, 2021. "Macroeconomic factors, working capital management, and firm performance—A static and dynamic panel analysis," Palgrave Communications, Palgrave Macmillan, vol. 8(1), pages 1-14, December.
    4. Sharma, Prateek, 2017. "Long-term persistence in corporate capital structure: Evidence from India," Research in International Business and Finance, Elsevier, vol. 42(C), pages 249-261.
    5. Nemiraja Jadiyappa & Mrunal Chavda, 2023. "Does CSR Regulation affect Financial Policy: A Quasi-Natural Experiment Approach," Working papers 574, Indian Institute of Management Kozhikode.
    6. Jadiyappa, Nemiraja & Hickman, L. Emily & Shrivastav, Santosh Kumar & Rajpal, Hanish & Kaur, Navneet, 2024. "Bank-affiliated directors' monitoring, earnings management, and financial reporting quality in emerging markets: Evidence from India," Emerging Markets Review, Elsevier, vol. 62(C).
    7. Anh-Tuan Doan, 2024. "Economic Freedom, Ownership Structure, and SME Financial Fragility: Evidence from an Emerging Economy," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 31(4), pages 975-1006, December.

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    More about this item

    Keywords

    Capital structure; Financial reforms; Debt maturity structure; Debt specialisation; Financial liberalisation;
    All these keywords.

    JEL classification:

    • G0 - Financial Economics - - General
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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