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Financial Constraints and Inventory Investment of Listed Non-Financial Firms in Nigeria

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  • OBEMBE, O.B.
  • ARAWOMO, O.
  • Afolabi, Babatunde

Abstract

Firms can experience financial constraints in periods when the monetary authority embarks on contractionary monetary policy. Firms with good internal sources of funds are usually not affected during this time, but those with poor internal sources of funds and coupled with high asymmetric information with lenders are expected to be financially constrained. The response of firms during this period has been of much concern to researchers. This study examined a sample of 76 quoted firms in the Nigerian Stock Exchange (NSE) to verify this hypothesis, using a system GMM method of econometrics, our result shows that financial constraints does not have any significant impact on inventory investment. The implication of this study is that, asymmetric information between borrowers and lenders may have little or no effect in the credit market in Nigeria.

Suggested Citation

  • OBEMBE, O.B. & ARAWOMO, O. & Afolabi, Babatunde, 2012. "Financial Constraints and Inventory Investment of Listed Non-Financial Firms in Nigeria," Business and Management Research, Business and Management Research, Sciedu Press, vol. 1(1), pages 106-114, March.
    • Handle: RePEc:jfr:bmr111:v:1:y:2012:i:1:p:106-114
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    References listed on IDEAS

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    3. Nickell, Stephen & Nicolitsas, Daphne, 1999. "How does financial pressure affect firms?," European Economic Review, Elsevier, vol. 43(8), pages 1435-1456, August.
    4. Rose Cunningham, 2004. "Finance Constraints and Inventory Investment: Empirical Tests with Panel Data," Macroeconomics 0411015, University Library of Munich, Germany.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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