The authors apply vector autoregression
to firm-level panel data from 36 countries to study the
dynamic relationship between firms' financial
conditions and investment. They argue that by using
orthogonalized impulse-response functions they are able to
separate the "fundamental factors" (such as
marginal profitability of investment) from the
"financial factors" (such as availability of
internal finance) that influence the level of investment.
The authors find that the impact of the financial factors on
investment, which they interpret as evidence of financing
constraints, is significantly larger in countries with less
developed financial systems. The finding emphasizes the role
of financial development in improving capital allocation and growth.
Bibliographic Details
| Main Authors: |
Love, Inessa,
Zicchino, Lea |
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| Language: | English
en_US |
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| Published: |
World Bank, Washington, DC
2002-10
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| Subjects: | ACCOUNTING,
ADVERSE SELECTION,
ASYMMETRIC INFORMATION,
AUTOREGRESSION,
BALANCE SHEETS,
BUSINESS CYCLES,
CAPITAL ALLOCATION,
CAPITAL MARKETS,
CD,
CREDIT MARKETS,
DEBT,
DIMINISHING RETURNS,
ECONOMETRIC MODELS,
ECONOMETRICS,
ECONOMIC ACTIVITY,
ECONOMIC DEVELOPMENT,
ECONOMIC GROWTH,
ECONOMIC STATISTICS,
ECONOMICS,
ECONOMISTS,
EXTERNAL FINANCING,
FINANCIAL FACTORS,
FINANCIAL INTERMEDIARIES,
FINANCIAL INTERMEDIARY DEVELOPMENT,
FINANCIAL INTERMEDIATION,
FINANCIAL MARKETS,
FIXED ASSETS,
GDP,
HUMAN CAPITAL,
INNOVATIONS,
LESS DEVELOPED COUNTRIES,
LIQUIDITY,
M3,
MARGINAL PRODUCT,
MARGINAL PRODUCTIVITY,
MORAL HAZARD,
NET WORTH,
NPV,
POLITICAL ECONOMY,
PRESENT VALUE,
PROFITABILITY,
PROGRAMS,
REAL INTEREST RATE,
STOCK MARKETS,
TIME SERIES FINANCIAL DEVELOPMENT,
INVESTMENT BEHAVIOR,
VECTOR AUTOREGRESSION,
FINANCIAL SYSTEMS,
COLLATERAL,
DECISION MAKING,
ALLOCATION OF RESOURCES,
CASH FLOW,
TIME SERIES,
FINANCIAL DEVELOPMENT, |
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| Online Access: | http://documents.worldbank.org/curated/en/2002/10/2040839/financial-development-dynamic-investment-behavior-evidence-panel-vector-autoregression
https://hdl.handle.net/10986/19216
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