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Bank Debt Use and Firm Size: Indian Evidence

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  • Saibal Ghosh

Abstract

The paper employs a sample of listed Indian manufacturing firms over the period 1995–2004 to examine the factors influencing the concentration of bank debt in total debt. The results indicate that the factors vary by firm size. Small to medium-sized firms have a high concentration of bank debt. The results support the reputation view that firms face differential debt choice as they grow larger. When evaluating bank regulations, policymakers need to consider the importance of the reputation-building service which banks provide to businesses. Copyright Springer 2007

Suggested Citation

  • Saibal Ghosh, 2007. "Bank Debt Use and Firm Size: Indian Evidence," Small Business Economics, Springer, vol. 29(1), pages 15-23, June.
    • Handle: RePEc:kap:sbusec:v:29:y:2007:i:1:p:15-23
    DOI: 10.1007/s11187-005-2402-0
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    References listed on IDEAS

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    Cited by:

    1. Fulbag Singh & Manpreet Kaur, 2015. "Why Exporting SMEs Switch Banks?," Global Business Review, International Management Institute, vol. 16(4), pages 652-664, August.
    2. Ghosh, Saibal, 2008. "Leverage and trade unionism in Indian industry: An empirical note," MPRA Paper 26400, University Library of Munich, Germany.
    3. Elena Alexandra Nenu & Georgeta Vintilă & Ştefan Cristian Gherghina, 2018. "The Impact of Capital Structure on Risk and Firm Performance: Empirical Evidence for the Bucharest Stock Exchange Listed Companies," IJFS, MDPI, vol. 6(2), pages 1-29, April.
    4. San Martín, Pablo & Saona, Paolo, 2017. "Capital structure in the Chilean corporate sector: Revisiting the stylized facts," Research in International Business and Finance, Elsevier, vol. 40(C), pages 163-174.
    5. Brian Lucey & Colm KEarney & Ciaran MacAnBhaird, 2012. "Culture and capital structure in small and medium sized firms," The Institute for International Integration Studies Discussion Paper Series iiisdp419, IIIS.
    6. Ciarán mac an Bhaird & Brian Lucey, 2010. "Determinants of capital structure in Irish SMEs," Small Business Economics, Springer, vol. 35(3), pages 357-375, October.
    7. Manpreet Kaur & Kanwaljeet Singh & Sarita Arora, 2023. "Are SMEs relationship seekers or price watchers? Target marketing implications for banks," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(3), pages 615-625, September.
    8. Fulbag Singh & Manpreet Kaur, 2014. "Small and Medium Enterprises’ Awareness Regarding Export Credit Delivery System," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 39(1), pages 63-79, February.
    9. Zélia Serrasqueiro & Paulo Maçãs Nunes, 2008. "Performance and size: empirical evidence from Portuguese SMEs," Small Business Economics, Springer, vol. 31(2), pages 195-217, August.
    10. Ansita Aggarwal & Satya Ranjan Acharya, 2019. "Impact On Capital Structure Decision Making: Indian Medium-Sized Food Industry Analysis," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 8(4), pages 47-60.
    11. Bhattacharya, Arnab, 2017. "Innovations in new venture financing: Evidence from Indian SME IPOs," Global Finance Journal, Elsevier, vol. 34(C), pages 72-88.
    12. Nieves Lidia Díaz‐Díaz & Pedro J. García‐Teruel & Pedro Martínez‐Solano, 2023. "Private family firms, generations and bank debt," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(3), pages 3043-3075, September.
    13. Manpreet Kaur, 2015. "Bank Selection Process and Market Segmentation: Evidence from Indian Exporting SMEs," Vision, , vol. 19(2), pages 79-88, June.

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    More about this item

    Keywords

    bank debt; small firms; reputation; India; G21; G32; E44;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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