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Financial Development and Growth in India

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  • Hiroko Oura
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    Abstract

    This paper examines the efficiency of the different segments of India''s financial system using firm-level data on corporate financing patterns. Firms are increasingly relying on external funds to finance their investment in most recent years. Empirical analyses indicate that (1) the financial system in India is not channeling funds into industries with higher external finance dependence; (2) the debt financing system does not allocate funds according to firms'' external finance dependence, while equity financing system does; and (3) firms in an industry that are more dependent on external finance grow more slowly.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 08/79.

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    Length: 30
    Date of creation: 01 Mar 2008
    Date of revision:
    Handle: RePEc:imf:imfwpa:08/79

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    Keywords: Financial systems; Corporate sector; Economic growth; Debt management; external finance; financial system; financial sector; bond; corporate bond; corporate bond market; foreign debt; bond market; equity market; financial stability; equity finance; financial structure; financial intermediation; stock market; debt ratios; financial sector development; equity markets; cash flow; long-term debt; external resources; debt contract; repayments; debt stocks; stock market development; bonds; financial economics; bond markets; commercial borrowing; cash flow from operation; equity capital; moral hazard; external financing; financial policies; financial institutions; reserve bank; corporate bonds; stock exchange; debt contracts; stock markets; financial regulation; balance of payments; debt market; stock market capitalization; debt-equity; debt holders; financial dependence; domestic financial system; ratio of debt; cash flows; financial markets;

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    Cited by:
    1. Snowden, Nicholas & Muñoz, Jesús, 2012. "Building a BRIC? Stock Market Opening and Investment Finance in India since Liberalization," World Development, Elsevier, Elsevier, vol. 40(6), pages 1109-1121.
    2. Jahangir Aziz, 2008. "Real and Financial Sector Linkages in China and India," IMF Working Papers 08/95, International Monetary Fund.
    3. Jahangir Aziz, 2008. "Deconstructing China’s and India’s Growth - The Role of Financial Policies," Macroeconomics Working Papers 22142, East Asian Bureau of Economic Research.
    4. C Niranjan Rao, 2008. "The Role of Intellectual Property Rights in Information and Communication Technologies," Working Papers id:1742, eSocialSciences.
    5. Didier, Tatiana & Schmukler, Sergio L., 2013. "The financing and growth of firms in China and India: Evidence from capital markets," Journal of International Money and Finance, Elsevier, Elsevier, vol. 39(C), pages 111-137.
    6. Allen, Franklin & Chakrabarti, Rajesh & De, Sankar & Qian, Jun “QJ” & Qian, Meijun, 2012. "Financing firms in India," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 21(3), pages 409-445.
    7. Jahangir Aziz, 2008. "Deconstructing China’s and India’s Growth: The Role of Financial Policies," Working Papers id:1714, eSocialSciences.

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