The impact of financial position on investment: an anlysis for non-financial corporations in the euro area
Annalisa Ferrando and
Authors registered in the RePEc Author Service: Carmen Martinez Carrascal
No 943, Working Paper Series from European Central Bank
This paper analyses the impact that firms financial position has on investment decisions using panel data from a large sample of non-financial corporations(around 120,000 firms) in six euro area countries(Belgium, Germany, France, Italy, the Netherlands and Spain). The results indicate that financial position is important to explain capital expenditures, as financial pressure appears relevant in explaining investment dynamics when it is proxied by cash flow, indebtedness and debt burden. The results also show differences in the sensitivity of investment rates to changes in financial pressure across countries, which appears to be especially large in the Netherlands and Italy and relatively small in Germany. JEL Classification: C33, E22, G32, J23
Keywords: balance sheet channel; financial pressure; fixed investment; Panel data (search for similar items in EconPapers)
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Working Paper: The impact of financial position on investment: an analysis for non-financial corporations in the euro area (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:2008943
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