Journal article
Oil price volatility and changes in corporate debt: An empirical study in the Indian landscape
The North American journal of economics and finance, v 73, 102187
Jul 2024
Abstract
•The study reveals that volatility in crude oil price affects the debt structure position of the firms.•The study finds that business group (BG) firms manage their financial positions differently from stand-alone (SA) firms.•BG firms differently manage their debt position compared with SA firms in presence of crude oil price volatility.•The findings provide a platform to the management of both categories of firms to consider the price movement of crude oil, etc.•To consider oil volatility, financial stability of the firmsand global economic conditions when changing capital structure matter.
Changes in crude oil prices affect corporate debt position. This study investigates the association between changes in debt and crude oil price volatility in nonfinancial, BG, and SA firms in India. We use financial variables, crude oil prices, and macroeconomics data from 2004 to 2020 for 16,452 firm-years and this study employs unbalanced panel data and utilizes different empirical methodologies, including the generalised method of moments (GMM) estimator, to test the stated hypotheses. The results reveal that the debt position and the crude oil price volatility significantly have different effects on business group (BG) and stand-alone (SA) firms. Crude oil price volatility is positively related to changes in the debt position. The effects of the financial variables also significantly differ for the BG and SA firms. Finally, firms change their debt position in the positive or negative direction based on the fluctuations in crude oil prices. Policy implications have also been provided.
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Details
- Title
- Oil price volatility and changes in corporate debt: An empirical study in the Indian landscape
- Creators
- Shawkat Hammoudeh - Drexel UniversityNitya Nand Tripathi - ICFAI Foundation for Higher EducationAsha Binu Raj - ICFAI Foundation for Higher EducationAviral Kumar Tiwari - Indian Institute of Management Ahmedabad
- Publication Details
- The North American journal of economics and finance, v 73, 102187
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Economics (School of Economics)
- Web of Science ID
- WOS:001245620500001
- Scopus ID
- 2-s2.0-85193919250
- Other Identifier
- 991021881383604721
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance
- Economics