Did Glass-Steagall Increase the Cost of External Finance for Corporate Investment?: Evidence From Bank and Insurance Company Affiliations

Carlos Ramirez

The Journal of Economic History, 1999, vol. 59, issue 2, 372-396

Abstract: The Glass-Steagall Act may have increased the cost for corporations of raising external funds for investment spending. Significant differences are found in the way financial institutions influenced corporate investment spending. Investment regressions for a sample of companies affiliated to financial institutions are estimated and compared to those for a control sample. Prior to Glass-Steagall, affiliated companies do not display any sensitivity between investment spending and internal measures of liquidity, whereas the control sample does.

Date: 1999
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