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Investment, Internal Funds and Public Banking in Germany

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  • Dirk Engel

    ()

  • Torge Middendorf

    ()

Abstract

Previous studies argued that low investment-cash flow sensitivities of German firms may be caused by dominance of public banking.The paper addresses this topic and applies a unique accounting dataset of German firms. Results from a dynamic panel data approach show that the dependence of investment spending on internal funds does not significantly differ between firms attached to savings banks, cooperative banks or commercial banks. Thus, the importance of the public banking sector in Germany may not explain the rather low dependence of firms on internal funds and public ownership of borrowers seems not essential to reduce financing constraints.

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Bibliographic Info

Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0007.

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Length: 30 pages
Date of creation: May 2007
Date of revision:
Handle: RePEc:rwi:repape:0007

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Keywords: Investment; Relationship Banking; Panel Data; GMM;

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References

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Citations

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Cited by:
  1. Gebhardt, Heinz & Siemers, Lars-H. R., 2011. "Die relative Steuerlast mittelständischer Kapitalgesellschaften
    [The relative tax burden of medium-sized corporations in Germany]
    ," MPRA Paper 28894, University Library of Munich, Germany.
  2. Behr, Patrick & Norden, Lars & Noth, Felix, 2013. "Financial constraints of private firms and bank lending behavior," Journal of Banking & Finance, Elsevier, vol. 37(9), pages 3472-3485.
  3. Sohn, Wook, 2010. "Market response to bank relationships: Evidence from Korean bank reform," Journal of Banking & Finance, Elsevier, vol. 34(9), pages 2042-2055, September.

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