Corporate finance in developing countries: New evidence for India

Recent work by Singh and Hamid (1992, Corporate Financial Structures in Developing Countries) and Singh (1995, Corporate Financial Patterns ill Industrializing Economies: A Comparative International Study) has suggested that large firms ina number of developing countries, including India, use much more external finance in general, and equity finance in particular, than those in developed countries. However, the contrast is in part a product of methodological differences, and India is much less different from countries such as Fiance and Italy. The Singh results are not due merely to bias arising from the focus on the largest companies, since the rest of the Indian corporate sector also issues large amounts of equity, via informal networks rather than organized stock exchanges. The importance of such issues suggests the need for further research before policy conclusions can be drawn. (C) 1998 Elsevier Science Ltd. All rights reserved.