Financing Constraints, Fixed Capital and R&D Investment Decisions of Belgian Firms

National Bank of Belgium Working Paper No. 32

58 Pages Posted: 15 Oct 2010

See all articles by Michele Cincera

Michele Cincera

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management

Date Written: May 1, 2002

Abstract

This paper aims at assessing the relationship between the possible existence of financial constraints and the decisions of Belgian private firms as regards their investments in both capital and R&D investments over the last decade. The main system GMM estimates from the error-correction equations indicate that the sensitivity of both types of investments to cash flow variations are rather differentiated. On the whole, these effects are more important for investments in ordinary assets, young small-scale firms located in the Walloon region that are not part of a multinational. Firms that perform R&D on a permanent basis and that receive public funds to support these activities appear to be less cash constraints.

Keywords: financial constraints, investments in capital and R&D, Belgian private companies, error-correction investment equations, system GMM panel data econometric models

JEL Classification: C23, E22, O31

Suggested Citation

Cincera, Michele, Financing Constraints, Fixed Capital and R&D Investment Decisions of Belgian Firms (May 1, 2002). National Bank of Belgium Working Paper No. 32. Available at SSRN: https://ssrn.com/abstract=1691989 or http://dx.doi.org/10.2139/ssrn.1691989

Michele Cincera (Contact Author)

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management ( email )

42 Av Franklin Roosevelt
1050
Brussels
Belgium
+3226504151 (Phone)
+3226504305 (Fax)

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