Financial Constraints and Capacity Adjustment in the United Kingdom: Evidence from a Large Panel of Survey Data

Abstract

The interrelationship between financial constraints and firm activity is a hotly debated issue. The way firms cope with financial constraints is fundamental to the analysis of monetary transmission, of financial stability and of growth and development. The CBI Industrial Trends Survey contains detailed information on the financial constraints faced by a large sample of UK manufacturers. This paper uses the quarterly CBI Industrial Trends Survey firm level data between January 1989 and October 1999. The cleaned

Keywords: Financial constraints, investment, capacity adjustment, small firm finance, duration analysis

JEL Classification: C33, D92, D21, C41