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Bank funding and firm investment in underdeveloped financial markets: evidence from India

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  • Mita Choudhury

Abstract

This paper highlights the importance of banking institutions in underdeveloped financial markets. Using the concept of external dependence of firms developed in the literature, the paper examines the importance of funds from development banks in India for firm investment. Results indicate that funds from development banks are particularly important for firms with high level of external dependence for funds. It highlights why regulatory reforms related to banking institutions may have adverse implications for firm investment in under-developed financial markets.

Suggested Citation

  • Mita Choudhury, 2010. "Bank funding and firm investment in underdeveloped financial markets: evidence from India," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 3(2), pages 227-244.
    • Handle: RePEc:taf:macfem:v:3:y:2010:i:2:p:227-244
    DOI: 10.1080/17520843.2010.498134
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    References listed on IDEAS

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    1. Jaramillo, Fidel & Schiantarelli, Fabio & Weiss, Andrew, 1993. "The effect of financial liberalization on allocation of credit : panel data evidence for Ecuador," Policy Research Working Paper Series 1092, The World Bank.
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    Cited by:

    1. Nakhoda, Aadil, 2012. "The influence of industry financial composition on export flow: A case study of a developing financial market," MPRA Paper 43792, University Library of Munich, Germany.
    2. Reddy, Kotapati Srinivasa, 2015. "Macroeconomic Change, and Cross-border Mergers and Acquisitions: The Indian Experience, 1991-2010," MPRA Paper 63562, University Library of Munich, Germany, revised 2015.
    3. Pradeepta Sethi, 2018. "Paradox of external finance in the Indian manufacturing sector," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 10(1), pages 95-111, April.

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