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Directed credit and investment in small-scale industry in India: evidence from firm-level data 1965-78
journal contribution
posted on 2023-06-08, 09:09 authored by Robert Eastwood, Renu KohliPanel data on 788 modern sector Indian firms during 1965-78 are used to analyse the link between the size of a firm and its financial environment. Exogeneity tests reveal that large firms with improved investment prospects could obtain external finance at the margin, but that small firms could not. The policy of directing bank credit accordingly relaxed a binding constraint on small firms, raising investment. Assuming that all of the rise in the credit-sales ratio in small firms was policy-induced then so was about one third of the 170 per cent rise during 1965-78 in their investment-sales ratio.
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Publication status
- Published
Journal
Journal of Development StudiesISSN
0022-0388Publisher
Taylor & FrancisExternal DOI
Issue
4Volume
35Page range
42-63ISBN
0022-0388Department affiliated with
- Economics Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2012-02-06Usage metrics
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