Assessing the impact of global crude oil price uncertainty on high corporate debt levels: empirical evidence from India

The volatility of the price of crude oil has been crucial in determining the course of the world economy. This study looks at how changes in oil prices between 2008 and 2022 affected the amount of corporate debt held by Indian companies listed on public exchanges. The results show that excessive debt is considerably reduced by increasing volatility in global crude oil prices, especially for small businesses that are categorized as non-state-owned enterprises (NSEO), non-high-tech firms (NHT) and non-energy firms (NEF). Furthermore, the analysis demonstrates that financial limitations increase the risks associated with business debt by exacerbating the negative consequences of oil price uncertainty. Robustness checks verify that the results are reliable. Businesses must implement focused financial measures to reduce related risks in the face of ongoing volatility in the oil market, particularly in frameworks that are less focused on the market. To improve resilience against external price shocks, financial institutions should take firm-specific vulnerabilities into account when developing lending policies.