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Financing Constraints And Inventory Investment: A Comparative Study With High-Frequency Panel Data

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Author Info
Robert E. Carpenter
Steven M. Fazzari
Bruce C. Petersen

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Abstract

This study provides new evidence of the importance of financing constraints for explaining the dramatic cycles in inventory investment. We compare the empirical performance of different financial variables (coverage ratio, cash stocks, and cash flow) used in previous research to test for the presence of financing constraints. The comparison is undertaken in a common framework with an identical sample and high-frequency (quarterly) firm panel data. Cash flow is much more successful than cash stocks or coverage in explaining the facts about inventory investment across firm size, different inventory cycles, and different manufacturing sectors. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technolog

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Publisher Info
Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 80 (1998)
Issue (Month): 4 (November)
Pages: 513-519
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Handle: RePEc:tpr:restat:v:80:y:1998:i:4:p:513-519

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  1. Nihal Bayraktar & Plutarchos Sakellaris & Philip Vermeulen, 2005. "Real versus financial frictions to capital investment," Working Paper Series 566, European Central Bank. [Downloadable!]
  2. Andrea Caggese, 2003. "Testing Financing Constraints on Firm Investment using Variable Capital," Economics Working Papers 1009, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 2006. [Downloadable!]
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  3. David G. Bivin, 2005. "Gauging the performance of the linear-quadratic inventory model," Applied Economics, Taylor and Francis Journals, vol. 37(11), pages 1215-1231, June. [Downloadable!] (restricted)
  4. Jonathan McCarthy & Egon Zakrajsek, 1998. "Microeconomic inventory adjustment and aggregate dynamics," Staff Reports 54, Federal Reserve Bank of New York. [Downloadable!]
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  5. Fabio C. Bagliano & Alessandro Sembenelli, 2004. "The cyclical behaviour of inventories: European cross-country evidence from the early 1990s recession," Applied Economics, Taylor and Francis Journals, vol. 36(18), pages 2031-2044, October. [Downloadable!] (restricted)
  6. Paul Mizen & Cihan Yalcin, 2006. "Monetary Policy, Corporate Financial Composition and Real Activity," Working Papers 0601, Research and Monetary Policy Department, Central Bank of the Republic of Turkey. [Downloadable!]
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  7. Filipe Silva & Carlos Carreira, 2009. "No Deep Pockets: Some stylized results on firms' financial constraints," GEMF Working Papers 2009-06, GEMF - Faculdade de Economia, Universidade de Coimbra. [Downloadable!]
  8. Nikolaus A. Siegfried, 2000. "Microeconometric Evidence for a German Credit Channel," Quantitative Macroeconomics Working Papers 20002, Hamburg University, Department of Economics. [Downloadable!]
  9. Piet van Gennip, 2005. "Loan Extension in China: a Rational Affair," DNB Working Papers 037, Netherlands Central Bank, Research Department. [Downloadable!]
  10. Moguillansky, Graciela, 2002. "Non-Financial Corporate Risk Management and Exchange Rate Volatility in Latin America," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  11. Josep A. Tribó, 2004. "Ownership Structure And Inventory Policy," Business Economics Working Papers wb043211, Universidad Carlos III, Departamento de Economía de la Empresa. [Downloadable!]
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  12. Nikolaus A. Siegfried, 2000. "Monetary Policy and Investment in Germany," Quantitative Macroeconomics Working Papers 20009, Hamburg University, Department of Economics. [Downloadable!]
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  13. Hallward-Driemeier, Mary, 2001. "Firm-level survey provides data on Asia's corporate crisis and recovery," Policy Research Working Paper Series 2515, The World Bank. [Downloadable!]
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