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Does Firm Size Matter? Evidence on the Impact of Liquidity Constraints of Firm Investment Behavior in Germany

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Author Info
Audretsch, David B.
Elston, Julie Ann

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Abstract

This paper examines the link between liquidity constraints and investment behavior for German firms of different sizes from 1970 to 1986. Results indicate that medium sized firms appear to be more liquidity constrained in their investment behavior than either the smallest or largest firms in the study, suggesting that the unique German infrastructure designed to assist the small firm has indeed succeeded in alleviating, to some degree, such liquidity constraints. Findings also support the hypothesis that the emerging competition and internationalism which characterized the German financial markets in the 1980's, have been improving access to capital for some groups of firms. Dieser Beitrag untersucht die Beziehung zwischen Liquiditätsbeschränkungen und Investitionsverhalten deutscher Unternehmen unterschiedlicher Größen im Zeitraum 1970 bis 1986. Die Ergebnisse deuten darauf hin, dass das Investitionsverhalten mittlerer Unternehmen stärker von der Liquiditätsseite her beschränkt ist als das der in der Untersuchung berücksichtigten kleinen und großen Unternehmen. Dies spricht dafür, dass die besondere deutsche Infrastruktur, die auf eine Unterstützung kleiner Unternehmen ausgerichtet ist, derartige Liquiditätsbeschränkungen mit Erfolg in gewissem Maße gelockert hat. Die Ergebnisse unterstützen auch die Hypothese, dass der stärkere Wettbewerb und die Internationalisierung, die die deutschen Finanzmärkte in den achtziger Jahren kennzeichneten, einigen Gruppen von Unternehmen den Zugang zu Kapital verbesserten.

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Paper provided by Hamburg Institute of International Economics in its series Discussion Paper Series with number 26306.

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Date of creation: 2000
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Handle: RePEc:ags:hiiedp:26306

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Keywords: Financial Economics;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  9. Elston, Julie Ann, 1996. "Investment, Liquidity Constraints and Bank Relationships: Evidence from German Manufacturing Firms," CEPR Discussion Papers 1329, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michael Ehrmann, 2004. "Firm Size and Monetary Policy Transmission – Evidence from German Business Survey Data," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  2. Konstantinos Drakos & Eleftherios Goulas & Christos Kallandranis, 2007. "New vs. used capital investment decisions under liquidity constraints," Applied Financial Economics Letters, Taylor and Francis Journals, vol. 3(1), pages 15-18, January. [Downloadable!] (restricted)
  3. Alex Coad, 2007. "Neoclassical vs evolutionary theories of financial constraints : critique and prospectus," Documents de travail du Centre d'Economie de la Sorbonne r07008, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne. [Downloadable!]
  4. Emmanuel Duguet & Stéphanie Monjon, 2004. "Is innovation persistent at the firm Level . An econometric examination comparing the propensity score and regression methods," Cahiers de la Maison des Sciences Economiques v04075, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  5. Czarnitzki, Dirk & Binz, Hanna L., 2008. "R&D Investment and Financing Constraints of Small and Medium-Sized Firm," ZEW Discussion Papers 08-047, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  6. Block, Jörn & Brockmann, Heiner & Klandt, Heinz & Kohn, Karsten, 2008. "Gründungshemmnisse in Marktmechanismen und Marktumfeld: Facetten empirischer Evidenz
    [Start-up Barriers in Germany: A Review of the Empirical Literature]    ," MPRA Paper 9358, University Library of Munich, Germany. [Downloadable!]
  7. Christopher F. Baum & Dorothea Schäfer & Oleksandr Talavera, 2006. "The Effects of Short-Term Liabilities on Profitability: A Comparison of German and US Firms," Boston College Working Papers in Economics 636, Boston College Department of Economics, revised 14 Apr 2007. [Downloadable!]
  8. Tuomas A. Peltonen & Ricardo M. Sousa & Isabel S. Vansteenkiste, 2009. "Asset prices, Credit and Investment in Emerging Markets," NIPE Working Papers 18/2009, NIPE - Universidade do Minho. [Downloadable!]
  9. Christopher F. Baum & Dorothea Schaefer & Oleksandr Talavera, 2007. "The Effects of Short-Term Liabilities on Profitability: The Case of Germany," Money Macro and Finance (MMF) Research Group Conference 2006 61, Money Macro and Finance Research Group. [Downloadable!]
    Other versions:
  10. Dietmar Harhoff, 1997. "Are There Financing Constraints for R&D and Investment in German Manufacturing Firms?," CIG Working Papers FS IV 97-45, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
    Other versions:
  11. Pierre M. Picard & David E. Wildasin, 2005. "Labor Market Pooling, Outsourcing and Contracts in Chamberlinian Cities," The School of Economics Discussion Paper Series 0520, Economics, The University of Manchester. [Downloadable!]
  12. Yuji Honjo & Nobuyuki Harada, 2006. "SME Policy, Financial Structure and Firm Growth: Evidence From Japan," Small Business Economics, Springer, vol. 27(4), pages 289-300, December. [Downloadable!] (restricted)
  13. Manjon-Antolin, M.C., 2004. "Firm size and short-term dynamics in aggregate entry and exit," Discussion Paper 2, Tilburg University, Center for Economic Research. [Downloadable!]
  14. PICARD, Pierre M. & WILDASIN, David E., 2006. "Labor market pooling, outsourcing and contracts in Chamberlinian regions," CORE Discussion Papers 2006060, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
  15. Dirk Engel & Torge Middendorf, 2007. "Investment, Internal Funds and Public Banking in Germany," Ruhr Economic Papers 0007, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
  16. Giorgio Fagiolo & Alessandra Luzzi, 2004. "Do Liquidity Constraints Matter in Explaining Firm Size and Growth? Some Evidence from the Italian Manufacturing Industry," LEM Papers Series 2004/08, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
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  17. Richard Hofler & Julie Ann Elston & Junsoo Lee, 2004. "Dividend Policy and Institutional Ownership: Empirical Evidence using a Propensity Score Matching Estimator," Papers on Entrepreneurship, Growth and Public Policy 2004-27, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group. [Downloadable!]
  18. Crespi Francesco & Scellato Giuseppe, 2007. "Ownership Structure, Financial Constraints and Investment Decisions: Evidence from a Panel of Italian Firms," Dipartimento di Economia "S. Cognetti de Martiis" LEI & BRICK - Laboratorio di economia dell'innovazione "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo 200705, University of Turin. [Downloadable!]
  19. Kritikos, Alexander S. & Kneiding, Christoph & Germelmann, Claas Christian, 2009. "Demand Side Analysis of Microlending Markets in Germany," IZA Discussion Papers 4292, Institute for the Study of Labor (IZA). [Downloadable!]
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