We examine how monetary policy influences corporate debt composition in India using firm-level data from 2001 to 2024. We find that a market-based indicator, the Treasury yield, induces deleveraging in total, bank, and bond debt, especially among listed and business-group-affiliated firms. By contrast, policy tightening often coincides with sustained or higher bank leverage for these firms, whereas promoter-controlled firms consistently deleverage. Bond-financing adjustments emerge mainly with lags and among a smaller set of issuers. The findings reveal segmented monetary transmission shaped by ownership and governance, underscoring the need for deeper bond markets, greater transparency, and heterogeneity-sensitive prudential oversight.
Sharma et al. (2026) studied this question.