Internal Capital Markets, Bank Borrowing, and Financing Constraints: Evidence from Belgian Firms
AbstractIn Belgium, financial and industrial groupings play a crucial role in the accumulation and allocation of capital in the economy. In this paper, it is hypothesized that Belgian firms for which investment is partly financed on an internal capital market, will not be subject to financing constraints to the same extent as firms which have to borrow from banks. Moreover, it is hypothesized that firms belonging to a group, transfer internal surpluses of funds to other group members by investing in financial assets. An empirical analysis confirms the first hypothesis, but rejects the second hypothesis. Copyright Blackwell Publishers Ltd 1998.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Business Finance & Accounting.
Volume (Year): 25 (1998-09)
Issue (Month): 7&8 ()
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0306-686X
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- George, R. & Kabir, M.R. & Qian, J., 2005. "Is Investment-Cash flow Sensitivity a Good Measure of Financing Constraints? New Evidence from Indian Business Group Firms," Discussion Paper 2005-49, Tilburg University, Center for Economic Research.
- Beuselinck Ch. & Deloof M., 2006.
"Business groups, taxes and accruals management,"
2006015, University of Antwerp, Faculty of Applied Economics.
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