05-02-2013, 04:50 PM
Investment and Financing in Corporate Sector in India
ABSTRACT
Krishnamurty and Sastry’s study in 197033 was perhaps the most comprehensive study on manufacturers inventories. They used CMI data and the consolidated balance sheet data of public limited companies published by RBI, to analyse each of the major components i.e. raw material, goods-in-process and finished goods for 21 industries over the period 1946-62. It was a time series study but some inter-industry cross section analysis had also been done. Accelerator represented by change in sales, bank finance and short-term interest rate were found to be important determinants. Utilisation of productive capacity and price anticipations had been found to be of some relevance. Another study conducted by them in 1975 analysed inventory investment in the context of flexible accelerator with financial variables. Both RBI and Stock Exchange, Official Directory, Mumbai data for seven important industries had been taken for the period of 1956-69. Their study of pooled cross section was in current prices whereas time series analysis based on RBI data was a constant prices. OLS results showed the important influence of accelerator, internal and external funds flow and fixed investment on inventory investment.