Causality between institutional finance and entrepreneurial development in Karnataka

The government of Karnataka has set-up an exclusive institution namely, Karnataka State Finance Corporation to promote entrepreneurial and developmental activities by providing necessary finance. The present paper exhibit the Granger causality between institutional finance and industrial development in Karnataka. With the help of Granger causality test an attempted has made to find the causality between institutional finance and industrial development. The causality test identified that KSFC credit was insufficient to influence gross capital formation, employment, index of consumer goods, index of consumer durables, index of capital goods. Therefore, there has been strong relationship between institutional finance and entrepreneurship development, but, insufficient to promote entrepreneurial development. Therefore, there is dire need to strengthen KSFC and institutional finance for effective entrepreneurial development.