Financial pressure, monetary policy effects and inventory adjustment by UK and Spanish firms

Andrew Benito ()
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Andrew Benito: Banco de España

No 226, Working Papers from Banco de España

Abstract: This paper examines the adjustment of inventories by firms in the UK and Spain. A widely-held view—but one which has not found much support in previous studies of inventories— is that a key channel for monetary policy is through influencing inventory accumulation. Using a large company-level panel dataset for both countries, significant effects associated with borrowing costs on inventories are estimated. Financial effects associated with liquidity and the borrowing ratio are estimated to be weaker in Spain than in the UK. Since the Spanish financial system is more clearly bank-based, this is interpreted as contrary to the ‘bank-dependence hypothesis’.

Keywords: Inventories; financial pressure; business cycles (search for similar items in EconPapers)
JEL-codes: E22 E52 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2002-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0226

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