ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Jitendra MahakudSubscribe to Jitendra Mahakud

Trends and Determinants of Private Corporate Sector Savings in India

The corporate savings rate in India has remained at a relatively low level throughout the long period of 1966-2000 and has, in fact, declined in the recent past, which is a worrisome matter if the planned high rate of economic growth with stability is to be achieved. It appears that profits after tax, investment opportunities, availability of external funds, cost of borrowings and cost of equity are the important determinants of the savings of the private corporate sector in India. This paper analyses the trends in private corporate savings in India during this period, and uses dynamic panel data for empirically identifying the factors which influence corporate savings decisions. The period analysis has also been carried out to gauge the impact of liberalisation on the behaviour of corporate savings in India.

Behaviour of Trade Credit

This paper analyses the trends and features of trade credit of the entire economy, public limited companies, private limited companies and foreign companies in India from 1966-67 to 2000-01, and estimates both time series and panel data models for empirically identifying the determinants of trade credit. The period analysis has also been carried out to gauge the impact of liberalisation on the determinants of trade credit. The paper finds that the government sector has remained a substantial user of trade credit through the entire period. The nature of behaviour of trade credit and the changes in it over the years clearly depend upon the type/ownership of companies.
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