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Investment and Financing Constraints: What Does the Data Tell?

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  • Vermeulen, Philip

    ()
    (European Central Bank)

Abstract

This paper analyses the presence of financing constraints in a large panel of German, French, Italian and Spanish firms. Nonparametric kernel density estimates of the difference between investment and cash flow are obtained. It is found that the density of this difference has a mode just below zero, indicating a clustering of firms investing at a level just below cash flow, indicating a cash flow constraint. It is shown that those firms investing an amount around their cash flow pay on average higher interest rates and have lower cash reserves, providing further evidence that these firms are indeed constrained.

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File URL: http://www.intech.unu.edu/publications/eifc-tf-papers/eifc03-25.pdf
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Bibliographic Info

Paper provided by United Nations University, Institute for New Technologies in its series EIFC - Technology and Finance Working Papers with number 25.

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Date of creation: 2003
Date of revision:
Handle: RePEc:dgr:unutaf:eifc03-25

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Web page: http://www.intech.unu.edu

Related research

Keywords: investment; finance; competitiveness; Germany; France; Italy; Spain;

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Cited by:
  1. Anastasiya Shamshur, 2010. "Access to Capital and Capital Structure of the Firm," CERGE-EI Working Papers wp429, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  2. Pál, Rozália & Ferrando, Annalisa, 2006. "Financing constraints and firms’ cash policy in the euro area," Working Paper Series 0642, European Central Bank.

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