Financing Firms in India

The authors examine the legal and business environments, financing channels, and governance mechanisms of various types of firms in India and compare them to those from other countries. Despite its English commonlaw origin, strong legal protection provided by the law, and a democratic government, corruption within India's legal system and government significantly weakens investor protection in practice. External financing of firms has been dominated by nonmarket sources of financing, while the characteristics of listed firms are similar to those from countries with weak investor protection. The evidence, including results based on a survey of small and medium-scale private firms, shows that alternative financing channels provide the most important source of funds. The authors also find that informal governance mechanisms, such as those based on reputation, trust, and relationships are more important than formal mechanisms (such as courts) in resolving disputes, overcoming corruption, and supporting growth.

Bibliographic Details

Main Authors:	Allen, Franklin, Chakrabarti, Rajesh, De, Sankar, Qian, Jun, Qian, Meijun
Language:	English
Published:	World Bank, Washington, DC 2006-08
Subjects:	ACCOUNTING, ACCOUNTING PRACTICES, ACCOUNTING SYSTEMS, AVERAGE LEVEL, BALANCE OF PAYMENTS, BANK DEPOSITS, BANKING SECTOR, BANKING SYSTEM, BANKRUPTCY, BARGAINING POWER, BORROWING, BROKERS, BUREAUCRACY, BUSINESS ENTERPRISES, BUSINESS ENVIRONMENT, BUSINESS OPERATIONS, CAPITAL MARKETS, CAPITALIZATION, CAUSAL IMPACT, CIVIL-LAW SYSTEMS, COMMERCIAL BANKS, COMMON STOCK, COMMON-LAW COUNTRIES, COMMON-LAW SYSTEM, COMMON-LAW SYSTEMS, COMPANIES ACT, COMPANY, CONGLOMERATES, CONTROLLING SHAREHOLDER, CORPORATE GOVERNANCE, CORPORATE GOVERNANCE MECHANISMS, CORPORATE GOVERNANCE SYSTEM, CORPORATE GROWTH, CORPORATE LAWS, CORPORATE SECTOR, CORPORATIONS, CORRUPTION, DEBT, DEMOCRACY, DEPOSITS, DEREGULATION, DIRECT INVESTMENT, DISCLOSURE REQUIREMENTS, DIVIDEND POLICIES, ECONOMIC CONDITIONS, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMICS, EMERGING MARKETS, EMPLOYMENT, ENTREPRENEURS, EQUITY CAPITAL, EQUITY MARKETS, FACE VALUE, FINANCIAL ASSETS, FINANCIAL DATA, FINANCIAL DEVELOPMENT, FINANCIAL INSTITUTIONS, FINANCIAL MARKETS, FINANCIAL SYSTEMS, FIRMS, FIXED ASSET, FOREIGN BANKS, FOREIGN DEBT, FOREIGN DIRECT INVESTMENT, GLOBALIZATION, GOVERNMENT INTERVENTION, GROWTH RATE, INDUSTRIAL COMPANIES, INSTITUTIONAL DEVELOPMENT, INTEREST RATES, INVESTOR PROTECTION, LAWS, LAWYERS, LEGAL ORIGIN, LEGAL PROTECTION, LENDERS, LICENSING, LISTED COMPANIES, MEDIUM ENTERPRISES, MINORITY INVESTOR, MINORITY INVESTOR PROTECTION, OFFERINGS, OVERHEAD COSTS, OWNERSHIP STRUCTURE, POLITICAL ECONOMY, PRIVATE COMPANIES, PRIVATE ENTERPRISE, PRIVATIZATION, PRODUCTIVITY, PROFITABILITY, PROPERTY RIGHTS, PROTECTION OF INVESTORS, PROTECTION OF MINORITY SHAREHOLDERS, PUBLIC COMPANIES, PUBLIC INSTITUTIONS, PURCHASING POWER, PURCHASING POWER PARITY, REGULATORY AUTHORITIES, RESERVE BANK OF INDIA, RESOURCE ALLOCATION, RETAINED EARNINGS, RULE OF LAW, SHARE CAPITAL, SHAREHOLDER RIGHTS, SHAREHOLDERS, SMALL ENTERPRISES, SMALL FIRMS, SME, SME SECTOR, SOCIETY, STATE ENTERPRISES, STATE OWNED BANKS, STOCK CORPORATIONS, STOCK EXCHANGE, STOCK EXCHANGES, STOCK MARKET, STOCK MARKETS, STOCK OWNERSHIP, STOCK PRICES, STOCKS, TAX EVASION, TAX RATES, TERM FINANCE, TRANSPARENCY, UNLISTED COMPANIES,
Online Access:	http://documents.worldbank.org/curated/en/2006/08/6951128/financing-firms-india https://hdl.handle.net/10986/8369
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