IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v56y2024i39p4702-4717.html
   My bibliography  Save this article

Does uncertainty dampen corporate leverage? Empirical analysis of demand and supply channels

Author

Listed:
  • Pragati Priya
  • Chandan Sharma

Abstract

This paper empirically investigates the influence of uncertainty on corporate leverage for 6248 Indian firms for the period 2011– 2021. We find that their leverage tends to fall when policy uncertainty increases. Further, we investigate the two channels through which policy uncertainty affects corporate leverage: demand and supply channels. We find that policy uncertainty increases the burden of debt financing. Furthermore, companies are inclined towards reducing their investment demand during periods of higher uncertainty. Both of these factors contribute to lower debt financing and leverage. Our findings are robust to endogeneity concerns and diverse model identifications using alternate measures of leverage and policy uncertainty.

Suggested Citation

  • Pragati Priya & Chandan Sharma, 2024. "Does uncertainty dampen corporate leverage? Empirical analysis of demand and supply channels," Applied Economics, Taylor & Francis Journals, vol. 56(39), pages 4702-4717, August.
    • Handle: RePEc:taf:applec:v:56:y:2024:i:39:p:4702-4717
    DOI: 10.1080/00036846.2023.2212976
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2023.2212976
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2023.2212976?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:56:y:2024:i:39:p:4702-4717. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.