Munich Personal RePEc Archive

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

Ghosh, Saibal and Sensarma, Rudra (2004): Does monetary policy matter for corporate governance? Firm-level evidence for India. Published in: Advances in Financial Economics , Vol. 9, (2004): pp. 327-353.

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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.

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