The Finance-Investment Link in a Transition Economy: Evidence For Poland From Panel Data
AbstractReal investment in Poland declined from 1990 to 1993, and has only slowly since recovered, while real credit decreased for a number of years. Has declining credit adversely affected investment? Controlling for industry and time fixed effect, and using dynamic panel data techniques, I estimate an investment model, which includes external and internal finance as investment determinants. The results suggest that internal and external finance are positively related to investment. Thus, industries seem to operate under hard budget constraints. Also, internal finance is more important than external finance in determining investment, thus indicating that credit rationing occurs. Finally, the effects of external finance are slightly greater among durable goods producing industries than among non-durable goods producing industries. Comparative Economic Studies (2001) 43, 31–52; doi:10.1057/ces.2001.2
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Volume (Year): 43 (2001)
Issue (Month): 1 (April)
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Other versions of this item:
- Weller, Christian E., 1999. "The finance-investment link in a transition economy: Evidence for Poland from panel data," ZEI Working Papers B 04-1999, ZEI - Center for European Integration Studies, University of Bonn.
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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