IDEAS home Printed from https://ideas.repec.org/a/eee/ememar/v59y2024ics1566014124000013.html
   My bibliography  Save this article

Do recessions induce Schumpeterian creative destruction? Micro Evidence from India

Author

Listed:
  • Saini, Seema
  • Ahmad, Wasim
  • Uddin, Gazi Salah

Abstract

According to the Schumpeterian cleansing hypothesis, economic downturns force inefficient firms off the market, freeing resources that can be allocated to more efficient firms. India, as an emerging economy, may experience a similar reallocation. The study uses micro-level data for publicly traded firms, including manufacturing and services sector firms, from 1988 to 2020. We find that reallocation is productivity-enhancing in general, i.e., credit moves from firms with low productivity to firms with high productivity, and normal economic downturns induce this efficiency-enhancing reallocation. We also observe that reallocation is less efficiency-enhancing during the Indian financial crisis, and constraints on productive firms could be one of the potential explanations for the lack of a cleansing effect.

Suggested Citation

  • Saini, Seema & Ahmad, Wasim & Uddin, Gazi Salah, 2024. "Do recessions induce Schumpeterian creative destruction? Micro Evidence from India," Emerging Markets Review, Elsevier, vol. 59(C).
    • Handle: RePEc:eee:ememar:v:59:y:2024:i:c:s1566014124000013
    DOI: 10.1016/j.ememar.2024.101106
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1566014124000013
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ememar.2024.101106?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

    Keywords

    Credit reallocation; Productivity; Cleansing effect; Severe economic downturns;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

    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:eee:ememar:v:59:y:2024:i:c:s1566014124000013. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620356 .

    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.