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Financial Liberalisation, Capital structure and investment: a study of Indian private corporate manufacturing sector

Shodhganga@INFLIBNET

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Title Financial Liberalisation, Capital structure and investment: a study of Indian private corporate manufacturing sector
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Contributor Shanta, N
 
Subject Development studies
Indian private corporate manufacturing sector
Financial Liberalisation
Capital structure
investment
 
Description In the new milieu of financial reforms in India, market forces increasingly govern the
newlineallocation of funds and this has implications for the availability, cost and quantum of
newlinefunds, which ceteris paribus will enable the corporate sector to make an optimum
newlinecombination of sources of funds for industrial investment. However, in recent times, the
newlinefinancial liberalization argument is criticized by certain micro economic arguments
newlinebased on market failures and information asymmetries in financial markets. It is argued
newlinethat in reality, information failures in loan markets and the consequent credit rationing
newlinemay occur between the buyers and suppliers of productive capital.
newlineThis new literature on corporate finance has emphaSized the cost disadvantages of
newlineexternal finance due to asymmetric information. Because, in imperfect financial markets
newlinewith asymmetric information, external funds are more expensive than internal funds
newlineand firms have to follow a hierarchy in which cheaper funds are preferable to more
newlineexpensive ones, and internal funds are the most preferred ones. This literature raises
newlinecertain issues to be to be discussed in the context of financialliberalisation: (1) Have the
newlineexpected benefits of the liberalisation and promotion of stock market and banking
newlinesector translated in to better financing choices at firm level? (2) What is the influence of
newlineexogenous financial sector liberalisation on firm level capital structure? (3) How does
newlinethe financing pattern relate to investment of firms? The present study empirically
newlineexamines these aspects using firm level data for a sample of 2269 manufacturing firms
newlinein the Indian private corporate sector.
newlineAgainst the background of policy changes in the financial sector, we have analysed the
newlinetrends and patterns of corporate finance at the aggregate level in the pre and post
newlineliberalisation period. One of the most striking aspects of trends in sources of funds for
newlineprivate corporate sector is the increasing dependence of firms on internal funds rather
newlinethan external funds.
Bibliography p.146-165, Appendices p.92-105
 
Date 2014-01-06T11:30:03Z
2014-01-06T11:30:03Z
2014-01-06
n.d.
2008
n.d.
 
Type Ph.D.
 
Identifier http://hdl.handle.net/10603/14680
 
Language English
 
Relation -
 
Rights university
 
Format 165p.
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None
 
Coverage Economics
 
Publisher Delhi
Jawaharlal Nehru University
Center for Development Studies
 
Source INFLIBNET