FINANCING DECISION AND FINANCIAL CONSTRAINT: A CASE OF NEPAL
This study mainly aimed at revealing recent financing practices based on financial constraint and unconstraint in Nepalese firms. The survey is based on the structured questionnaire completed by 122 major Nepalese firms of which 22 were in the manufacturing sector, 38 were in service, 36 were in trading, 16 in communication sector and remaining 10 were in the health sector. The survey shows that constrained firms planned to reduce employment and new investment. The study further reveals that constrained firms funding abnormally large investment primarily by cash flow and cash holdings and relatively less from debt capital. Constrained firms also suffer from cash and generate it after selling more assets for the business operation. The study also indicates that many constrained firms drop their investment due to the inability to borrow, the majority of finance officers expressed their potential investment could not be implemented. 26% of respondents of private firms opined that they cancelled or postponed their planned investment when access to the capital market is limited.
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