A TOBIT analysis of financial crisis impact on capital structure

摘要

Integration of India into the global economy and the contagious spread of financial crisis across countries has resulted in the financial restructuring of many industries. Textile industry, one of the major contributors of India's GDP and exports, changed their capital structure post financial crisis. Capital structure theories in the literature explain that the firm characteristics like size, profitability, tangibility, NDTS and growth affect the financing decision of the firm. In this study, t test was performed to prove that there is a significant change in the borrowing pattern before and after global financial crisis 2007-08 with the major influence on bank and financial institution borrowing. Further, TOBIT analysis was performed to find the influence of global financial crisis on firm's capital structure along with firm characteristics and industry groups as control variables. As a result, financial crisis impacts capital structure and the impact vary across different industry groups.