Growth and finance constraints in Indian manufacturing firms

In this article, we attempt to evaluate the impact of finance constraints on the growth of firms. We also take in our purview some of the other debated issues relating to firm growth such as growth distribution, persistence and influence of size and maturity. For a sample of 2282 Indian manufacturing firms in the period 1994 to 2009, we show that the growth process of firms does not follow normal distribution; growth of firms is persistent; and size, maturity and finance constraints negatively influence the growth of firms. We check the robustness of our results using alternative samples, firm growth measures and estimation techniques.