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Does monetary policy matter for corporate governance? Firm-level evidence for India

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  • Ghosh, Saibal
  • Sensarma, Rudra

Abstract

The paper assembles data on over 1,000 manufacturing and services firms in India for the entire post-reform period from 1992 through 2002 to examine the association between corporate governance and monetary policy. The findings suggests that (a) public firms are relatively more responsive to a monetary contraction vis-à-vis their private counterparts; and, (b) quoted firms lower their long-term bank borrowings in favour of short-term borrowings, post monetary tightening, as compared with unquoted firms. A disaggregated analysis based on firm size and leverage above a certain threshold validates these findings. The study concludes by analyzing the broad policy implications of these findings.

Suggested Citation

  • Ghosh, Saibal & Sensarma, Rudra, 2004. "Does monetary policy matter for corporate governance? Firm-level evidence for India," MPRA Paper 19756, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:19756
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    File URL: https://mpra.ub.uni-muenchen.de/19756/1/MPRA_paper_19756.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ghosh, Saibal & Ghosh, Saurabh, 2006. "Impact of Liquidity constraint on Firms’ Investment Decisions," MPRA Paper 17181, University Library of Munich, Germany.
    2. Nachane, D M & Ghosh, Saibal & Ray, Partha, 2005. "Bank nominee directors and corporate performance: micro evidence for India," MPRA Paper 2707, University Library of Munich, Germany.
    3. Saibal Ghosh, 2005. "Does leverage influence banks' non-performing loans? Evidence from India," Applied Economics Letters, Taylor & Francis Journals, vol. 12(15), pages 913-918.
    4. Saibal Ghosh, 2006. "Do board characteristics affect corporate performance? Firm-level evidence for India," Applied Economics Letters, Taylor & Francis Journals, vol. 13(7), pages 435-443.
    5. Anna Białek-Jaworska & Natalia Nehrebecka, 2016. "The role of bank credit in business financing in Poland," Working Papers 2016-03, Faculty of Economic Sciences, University of Warsaw.
    6. Ghosh, Saibal, 2006. "Did financial liberalization ease financing constraints? Evidence from Indian firm-level data," Emerging Markets Review, Elsevier, vol. 7(2), pages 176-190, June.
    7. Saibal Ghosh, 2008. "Leverage, foreign borrowing and corporate performance: firm-level evidence for India," Applied Economics Letters, Taylor & Francis Journals, vol. 15(8), pages 607-616.
    8. Ghosh, Saibal & Ghosh, Saurabh, 2006. "Does Monetary Policy Affect A Firm’s Investment Through Leverage? Micro Evidence for India," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 59(1), pages 17-31.
    9. Saibal Ghosh, 2007. "Bank Debt Use and Firm Size: Indian Evidence," Small Business Economics, Springer, vol. 29(1), pages 15-23, June.
    10. Ghosh, Saibal, 2007. "External Auditing, Managerial Monitoring and Firm Valuation: An Empirical Analysis for India," MPRA Paper 17142, University Library of Munich, Germany.

    More about this item

    Keywords

    monetary policy; corporate governance; relationship lending; leverage; India;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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