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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- Slomka, Agnieszka, 2005. "Have banks filled the gap? Credit as a mechanism of corporate governance in a transition country: example of Poland," MPRA Paper 642, University Library of Munich, Germany.
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ZEI Working Papers
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- Weller, Christian E. & von Hagen, Jürgen, 1999. "Financial fragility or what went right and what could go wrong in central European banking?," ZEI Working Papers B 13-1999, ZEI - Center for European Integration Studies, University of Bonn.
- Tomasz Mickiewicz & Kate Bishop & Urmas Varblane, 2004. "Financial Constraints in Investment - Foreign Versus Domestic Firms. Panel Data Results From Estonia, 1995-1999," William Davidson Institute Working Papers Series 2004-648, William Davidson Institute at the University of Michigan.
- Mykhayliv, Dariya & Zauner, Klaus G., 2013. "Investment behavior and ownership structures in Ukraine: Soft budget constraints, government ownership and private benefits of control," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 265-278.
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