Financial liberalisation and Capital structuring decisions of corporate firms: Evidence from India

•The impact financial liberalisation on leverage and debt maturity is negative.•Debt specialisation increased following the liberalisation.•The effect is more pronounced for priority firms compared to non priority firms.•We use a reform index to measure financial liberalisation.•Reforms index captures the gradual nature of implementation of financial reforms.

We examine the impact of financial reforms on corporate financing decisions of Indian firms using the fixed effects panel estimator. The impact on the leverage and debt maturity ratio is negative while a positive effect is observed on debt specialisation. The impact is greater for priority firms compared to non-priority firms.