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Do investments in human and physical capital respond differently to financing constraints?

Author

Listed:
  • Giorgio Brunello
  • Áron Gereben

    (European Investment Bank)

  • Désirée Rückert

    (European Investment Bank)

  • Christoph Weiss

    (European Investment Bank)

  • Patricia Wruuck

    (European Investment Bank)

Abstract

Using a representative sample of European firms, we study whether financing constraints affect employers’ investments in employee training and physical capital differently. We measure financing constraints with an index that combines survey and balance sheet data. We instrument this index with the non-performing loans ratio of the bank that provided the last loan to the firms or with the average ratio of banks in the local area. We find that financing constraints have no effect on investment in training, but substantially reduce investment in physical capital.

Suggested Citation

  • Giorgio Brunello & Áron Gereben & Désirée Rückert & Christoph Weiss & Patricia Wruuck, 2022. "Do investments in human and physical capital respond differently to financing constraints?," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-14, December.
    • Handle: RePEc:spr:sjecst:v:158:y:2022:i:1:d:10.1186_s41937-022-00090-8
    DOI: 10.1186/s41937-022-00090-8
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    1. Lee, Chien-Chiang & Wang, Chang-song, 2022. "Financial development, technological innovation and energy security: Evidence from Chinese provincial experience," Energy Economics, Elsevier, vol. 112(C).

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    More about this item

    Keywords

    Training; Financing constraints; Europe;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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