The impact of Covid-19 on the capital structure in emerging economies: evidence from India

Purpose Capital structure is an important corporate financing decision, particularly for companies in emerging economies. This paper attempts to understand whether the pandemic had any significant impact on capital of India being a prominent economy ideal candidate analysis. Design/methodology/approach The study utilizes three leverage ratios extended market index, BSE500, period 2015–2021. considered are short-term ratio (STLR), long-term (LTLR) and total (TLR). A dummy variable differentiates pre-epidemic (2015–2019) (2020–2021) period. Control variables used represent firm characteristics such as growth, tangibility, profit, size liquidity. Dynamic panel data regression employed address endogeneity. Findings findings point out that Covid-19 has significant, negative effect LTLR, while STLR TLR was insignificant. indicate based culturally risk-averse environment, India, would reduce debt avoid bankruptcy times uncertainty. Research limitations/implications covers Indian companies. Hence, generalization global context might not be valid. Practical implications To maintain economic growth post-crisis period, policymakers should ensure accessibility low-cost capital. provide impetus deepen insignificant bond future revival. Originality/value Developing countries struggling revive economies postpandemic. true Asian which heavily reliant banks survival. research finds evidence utilize source raising