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Money, credit and investment in UK corporate sector

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  • Andrew Brigden
  • Paul Mizen

Abstract

This paper investigates the interactions between investment, money holding and bank borrowing by private non-financial corporations (PNFCs). Long-run relationships are identified for investment, money and borrowing, and the dynamics indicate the existence of feedbacks from money and credit disequilibria onto investment. The results are considered to be consistent with the existence of a credit channel.

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File URL: http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/1999/wp100.pdf
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Bibliographic Info

Paper provided by Bank of England in its series Bank of England working papers with number 100.

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Date of creation: Sep 1999
Date of revision:
Handle: RePEc:boe:boeewp:100

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  1. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
  2. Cuthbertson, Keith, 1985. "Sterling Bank Lending to UK Industrial and Commercial Companies," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 47(2), pages 91-118, May.
  3. Urbain, Jean-Pierre, 1992. "On Weak Exogeneity in Error Correction Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(2), pages 187-207, May.
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  5. Hayne E. Leland and David H. Pyle., 1976. "Informational Asymmetries, Financial Structure, and Financial Intermediation," Research Program in Finance Working Papers 41, University of California at Berkeley.
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  7. Joe Ganley & Chris Salmon, 1997. "The Industrial Impact of Monetary Policy Shocks: Some Stylised Facts," Bank of England working papers 68, Bank of England.
  8. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
  9. Hendry, David F., 1995. "Dynamic Econometrics," OUP Catalogue, Oxford University Press, number 9780198283164, Octomber.
  10. Jaffee, Dwight M & Russell, Thomas, 1976. "Imperfect Information, Uncertainty, and Credit Rationing," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 651-66, November.
  11. Drake, Leigh, 1996. "Relative Prices in the UK Personal Sector Money Demand Function," Economic Journal, Royal Economic Society, vol. 106(438), pages 1209-26, September.
  12. Mark Gertler & Simon Gilchrist, 1993. "The role of credit market imperfections in the monetary transmission mechanism: arguments and evidence," Finance and Economics Discussion Series 93-5, Board of Governors of the Federal Reserve System (U.S.).
  13. Simon G. Gilchrist & Ben Bernanke & Mark Gertler, 1994. "The financial accelerator and the flight to quality," Finance and Economics Discussion Series 94-18, Board of Governors of the Federal Reserve System (U.S.).
  14. Mark S Astley & Andrew G Haldane, 1995. "Money as an Indicator," Bank of England working papers 35, Bank of England.
  15. Boswijk, H. Peter, 1995. "Efficient inference on cointegration parameters in structural error correction models," Journal of Econometrics, Elsevier, vol. 69(1), pages 133-158, September.
  16. Søren Johansen & Katarina Juselius, 1992. "Identification of the Long-Run and the Short-Run Structure: An Application to the ISLM Model," Discussion Papers 92-04, University of Copenhagen. Department of Economics.
  17. Drake, Leigh & Chrystal, K Alec, 1994. "Company-Sector Money Demand: New Evidence on the Existence of a Stable Long-Run Relationship for the United Kingdom," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(3), pages 479-94, August.
  18. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
  19. Ireland, Jonathan & Wren-Lewis, Simon, 1992. "Buffer Stock Money and the Company Sector," Oxford Economic Papers, Oxford University Press, vol. 44(2), pages 209-31, April.
  20. Bardsen, G. & Fisher, P.G., 1993. "The Importance of Being Structured," Papers 02-93, Norwegian School of Economics and Business Administration-.
  21. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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Citations

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Cited by:
  1. K Alec Chrystal & Paul Mizen, 2001. "Other financial corporations: Cinderella or ugly sister of empirical monetary economics?," Bank of England working papers 151, Bank of England.
  2. Shamik Dhar & Darren Pain & Ryland Thomas, 2000. "A small structural empirical model of the UK monetary transmission mechanism," Bank of England working papers 113, Bank of England.
  3. Bruggeman, Annick & Donnay, Marie, 2003. "A monthly monetary model with banking intermediation for the euro area," Working Paper Series 0264, European Central Bank.
  4. Seitz, Franz & von Landesberger, Julian, 2010. "Household money holdings in the euro area: An explorative investigation," Working Paper Series 1238, European Central Bank.
  5. Christoffer Kok Sørensen & David Marqués Ibáñez & Carlotta Rossi, 2012. "Modelling loans to non-financial corporations in the euro area," Temi di discussione (Economic working papers) 857, Bank of Italy, Economic Research and International Relations Area.
  6. K Alec Chrystal & Paul Mizen, 2001. "Consumption, money and lending: a joint model for the UK household sector," Bank of England working papers 134, Bank of England.
  7. José Manuel Marqués & Fernando Nieto & Ana del Río, 2005. "Una aproximación a los determinantes de la financiación de las sociedades no financieras en España," Banco de Espa�a Working Papers 0535, Banco de Espa�a.
  8. Ursel Baumann & Glenn Hoggarth & Darren Pain, 2005. "The substitution of bank for non-bank corporate finance: evidence for the United Kingdom," Bank of England working papers 274, Bank of England.
  9. Martinez-Carrascal, Carmen & von Landesberger, Julian, 2010. "Explaining the money demand of non-financial corporations in the Euro area: A macro and a micro view," Working Paper Series 1257, European Central Bank.

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