Did financial liberalization ease financing constraints? Evidence from Indian firm-level data

Using a panel dataset of over 1000 listed Indian manufacturing firms for the period 1995-2004, the paper examines whether financial liberalization led to an easing of financial constraints. The results indicate that financial liberalization led to a significant easing of financing constraints. This easing was particularly notable in the case of small firms and in fact, became more pronounced during the latter half of the sample period. The analysis concludes with several robustness checks of the baseline results.