{
  "title": "Financial Development and Growth in India: A Growing Tiger in a Cage?",
  "publication": "IMF Working Papers, March 1, 2008",
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  "summary": "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.",
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    {
      "heading": "Key findings",
      "content": "- Firms are increasingly relying on external funds to finance their investment in most recent years.\n- Empirical analyses indicate:\n  - (1) the financial system in India is not channeling funds into industries with higher external finance dependence;\n  - (2) the debt financing system does not allocate funds according to firms' external finance dependence, while equity financing system does;\n  - (3) firms in an industry that are more dependent on external finance grow more slowly."
    },
    {
      "heading": "Implications for financial intermediation and growth",
      "content": "- Allocation inefficiency: The Indian financial system appears to underperform in directing funds toward industries with greater external finance dependence, implying potential misallocation of capital across sectors.\n- Debt vs. equity segmentation: Debt markets do not reflect firms' external finance needs in their allocation, while equity markets do, suggesting differential effectiveness across financial segments.\n- Growth constraints: Industries with higher external finance dependence exhibit slower firm growth, indicating that insufficient or misallocated external finance may be a binding constraint on firm-level and industry-level growth."
    },
    {
      "heading": "Data and scope",
      "content": "- Analysis based on firm-level data on corporate financing patterns.\n- Focus on comparative efficiency across different segments of India's financial system (debt financing system, equity financing system, overall financial system).\n\n---\n\n Content in this bundle\n\n- wp0879\n  - wp0879 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp0879 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/financial-development-and-growth-in-india-a-growing-tiger-in-a-cage-21838"
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    "Authors: Hiroko Oura",
    "Published: March 1, 2008",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451869408.001",
    "Firms are increasingly relying on external funds to finance their investment in most recent years.",
    "Empirical analyses indicate:",
    "Allocation inefficiency: The Indian financial system appears to underperform in directing funds toward industries with greater external finance dependence, implying potential misallocation of capital across sectors.",
    "Debt vs. equity segmentation: Debt markets do not reflect firms' external finance needs in their allocation, while equity markets do, suggesting differential effectiveness across financial segments.",
    "Growth constraints: Industries with higher external finance dependence exhibit slower firm growth, indicating that insufficient or misallocated external finance may be a binding constraint on firm-level and industry-level growth.",
    "Analysis based on firm-level data on corporate financing patterns.",
    "Focus on comparative efficiency across different segments of India's financial system (debt financing system, equity financing system, overall financial system).",
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