Financing the Winners of Yesterday

Rahul Chauhan, Joint Program in Financial Economics PhD Student

India’s 1991 liberalization marked a turning point in its industrial and financial landscape, triggering rapid expansion in firm activity, production, and trade. While its impact on growth and competition is well studied, far less is known about how the financial sector adapted to this transformation. This project examines how liberalization reshaped firms’ access to credit and capital markets, and how these changes influenced industrial organization and business group dominance. Despite deepening financial intermediation, India’s credit markets remain collateral-driven and its corporate bond markets underdeveloped. Using newly assembled data from the Ministry of Corporate Affairs, CMIE, the Reserve Bank of India, the Annual Survey of Industries, and the Economic Census, the project traces the evolution of firm financing, investment, and market entry after liberalization. The broader goal is to understand how the structure and development of financial markets condition patterns of industrial growth and inequality following major reform episodes.