Internal Finance and Corporate Investment: Belgian Evidence with Panel Data

23 Pages Posted: 3 Jun 2011 Last revised: 22 Aug 2011

Fernando Barran

affiliation not provided to SSRN

Marga Peeters

De Nederlandsche Bank

Date Written: May 1, 1998

Abstract

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.

Keywords: Investment, corporate, financial, financial restrictions, coordination centers, panel, GMM

JEL Classification: C23, G32, G3, D92

Suggested Citation

Barran, Fernando and Peeters, Marga, Internal Finance and Corporate Investment: Belgian Evidence with Panel Data (May 1, 1998). Economic Modelling, Vol. 15, 1998. Available at SSRN: https://ssrn.com/abstract=1857367

Fernando Barran

affiliation not provided to SSRN ( email )

Marga Peeters (Contact Author)

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Paper statistics

Downloads
19
Abstract Views
225