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Financing constraints, fixed capital and R&D investment decisions of belgian firms

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  • Michele Cincera

    () (Université Libre de Bruxelles, DULBEA, CEPR)

Abstract

This paper aims at assessing the relationship between the possible existence of financial constraints and the decisions of Belgian private firms as regards their investments in both capital and R&D investments over the last decade. The main system GMM estimates from the error-correction equations indicate that the sensitivity of both types of investments to cash flow variations are rather differentiated. On the whole, these effects are more important for investments in ordinary assets, young small-scale firms located in the Walloon region that are not part of a multinational. Firms that perform R&D on a permanent basis and that receive public funds to support these activities appear to be less cash constraints.

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File URL: http://www.nbb.be/doc/oc/repec/reswpp/WP32.pdf
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Bibliographic Info

Paper provided by National Bank of Belgium in its series Working Paper Research with number 32.

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Length: 58 pages
Date of creation: May 2002
Date of revision:
Handle: RePEc:nbb:reswpp:200205-13

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Related research

Keywords: financial constraints; investments in capital and R&D; Belgian private companies; error-correction investment equations; system GMM panel data econometric models;

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References

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  1. Bronwyn H. Hall, Jacques Mairesse, Lee Branstetter, and Bruno Crepon., 1998. "Does Cash Flow Cause Investment and R& D: An Exploration Using Panel Data for French, Japanese, and United States Scientific Firms," Economics Working Papers 98-260, University of California at Berkeley.
  2. Hall, Bronwyn H. & Mairesse, Jacques, 1995. "Exploring the relationship between R&D and productivity in French manufacturing firms," Journal of Econometrics, Elsevier, vol. 65(1), pages 263-293, January.
  3. Bronwyn H. Hall & Jacques Mairesse & Benoit Mulkay, 1998. "Firm-level investment in France an the United States: an exploration of what we have learned in twenty years," IFS Working Papers W98/10, Institute for Fiscal Studies.
  4. Henri Capron & Michele Cincera & Annemie Hollant & Wim Meeusen, 1999. "Harmonisation of Belgian annual business expenditures on research and development (ANBERD) data - 1973-1996," ULB Institutional Repository 2013/935, ULB -- Universite Libre de Bruxelles.
  5. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  6. Paxil Butzen & Catherine Fuss & Philip Vermeulen, 2002. "The interest rate and crédit channels in Belgium: an investigation with micro-level firm data," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 45(3), pages 5-36.
  7. Steve Bond & Julie Elston & Jacques Mairesse & Benoit Mulkay, 1997. "Financial factors and investment in Belgium, France, German and the UK: A comparison using company panel data," IFS Working Papers W97/08, Institute for Fiscal Studies.
  8. Stephen BOND & Dietmar HARHOFF & John VAN REENEN, 2005. "Investment, R&D and Financial Constraints in Britain and Germany," Annales d'Economie et de Statistique, ENSAE, issue 79-80, pages 433-460.
  9. Pr. D. Patrick Van Cayseele, 2002. "Investment, R&D and liquidity constraints," Working Paper Research 33, National Bank of Belgium.
  10. Henri Capron & Michele Cincera, 1998. "Assessing the R&D determinants and productivity of world-wide manufacturing firms," ULB Institutional Repository 2013/849, ULB -- Universite Libre de Bruxelles.
  11. Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
  12. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
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