Internal Finance and Corporate Investment: Belgian Evidence with Panel Data
affiliation not provided to SSRN
De Nederlandsche Bank
May 1, 1998
Economic Modelling, Vol. 15, 1998
In this paper the corporate investment decision under financial restrictions is investigated with Belgian firm data from 1984 to 1992. An investment Euler equation is derived from a dynamic optimization model with debt ceilings and an elastic credit supply. The model is estimated by GMM for different firm groups. An important aspect is that the sample is split according to a firm’s association with coordination centers. These centers have become the major external funding source of corporate investment in Belgium since 1986. The estimation results show the dependence of corporate investment on financial factors, both for non-coordination center as well as coordination center firms.
Number of Pages in PDF File: 23
Keywords: Investment, corporate, financial, financial restrictions, coordination centers, panel, GMM
JEL Classification: C23, G32, G3, D92
Date posted: June 3, 2011 ; Last revised: August 22, 2011
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