What is it about?

The purpose of this paper is to examine the financing practices of unlisted manufacturing firms in India. In particular, the authors seek to explore how unlisted firms finance their growth and the extent to which they rely on external source of finance. Additionally, they explore whether the determinants of indebtedness that explain the borrowing behavior of listed Indian manufacturing firms are capable of explaining the financing decisions of unlisted firms as well.

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Why is it important?

This paper is important because not too many papers have dealt with indebtedness of unlisted firms in India.


Unlisted Indian manufacturing firms are largely dependent on bank borrowing for their growth, and access to finance is largely dependent on collateral capacity. The authors results show that the dominant firm factors affecting indebtedness of unlisted firms in India are asset tangibility, firm growth, size, profitability and firm age. Institutional and macroeconomic factors are also observed to be significant influencers of indebtedness.

Professor Raju Majumdar
IILM Graduate School of Management

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This page is a summary of: The determinants of indebtedness of unlisted manufacturing firms in India, Management Research Review, August 2014, Emerald, DOI: 10.1108/mrr-09-2012-0193.
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