Factors affecting ethical sources of external debt financing for indian agribusiness firms

Abstract

Majority of the Indian farmers are financially constrained and pay very high interest rate to private moneylenders which has a negative impact on the survivability and growth of agribusiness firms. Because of less strict debt financing requirements farmers become prey to predatory lenders from private lending institutions that are not controlled by the central bank and may not behave in an ethical way. The study investigates factors affecting ethical sources of external debt financing by taking a sample of Indian agribusiness firms. Owners of agribusiness firms were interviewed through personal visits and telephone calls regarding the factors affecting ethical sources of external debt financing. The findings show that several factors affect ethical sources of external debt financing for agribusiness firms in India. This study contributes to the literature on the factors that affect ethical sources of external debt financing. This study also provides recommendations to improve access to ethical sources of external debt financing. The findings may be useful for agribusiness owners (farmers), financial managers, investors, agribusiness management consultants, entrepreneurs, and other stakeholders.