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

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Author Info
Michele Cincera () (Université Libre de Bruxelles, DULBEA, CEPR)

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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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Paper provided by National Bank of Belgium in its series Research series with number 200205-13.

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Length: 58 pages
Date of creation: May 2002
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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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Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives

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