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Determinants of Firm Investment: Evidence from Slovenian Firm-Level Data

Author

Listed:
  • Crt Lenarcic

    (Bank of Slovenia)

  • Georgios Papadopoulos

    (Economics Research Centre, University of Cyprus)

Abstract

This paper examines the role of corporate balance sheet positions in ­determining ­Slovenian ­firms' ­investment­ behaviour. ­The ­analysis­ is ­based ­on ­the ­­theoretical ­framework­ of­ the ­financial ­accelerator, ­which ­suggests ­that ­firms' ­­financial ­positions ­influence ­their ­real­ behaviour.­ The ­­underlying ­­hypotheses ­of ­the ­financial ­accelerator ­are ­tested,­ namely­ its ­­asymmetric ­­effec t­­during ­crises ­and ­in­ respect to ­firms'­size. ­In ­addition,­ the ­existence­ of ­differences ­in ­the ­relationship ­between ­the ­balance ­sheet ­variables ­and ­­investment­ across­ various­ sectors ­is­ examined.­ The ­results ­indicate­ that ­­balance ­sheet ­strength­ is­ an ­important ­determinant ­of ­Slovenian ­firms' investment ­­behaviour.­ Moreover,­ this ­relationship ­is affected­ by ­a­ firm's ­size­ but ­the ­effect ­of ­the ­crisis ­or ­its ­sectoral­ specialization ­does ­not­ seem­ to­ materially ­affect ­it.

Suggested Citation

  • Crt Lenarcic & Georgios Papadopoulos, 2020. "Determinants of Firm Investment: Evidence from Slovenian Firm-Level Data," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 18(2), pages 159-180.
    • Handle: RePEc:seb:journl:v:18:y:2020:i:2:p:159-180
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    Cited by:

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    3. Sahoo, Pravakar & Bishnoi, Ashwani, 2023. "Drivers of corporate investment in India: The role of firm-specific factors and macroeconomic policy," Economic Modelling, Elsevier, vol. 125(C).

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    More about this item

    Keywords

    Firm Investment; Financial Accelerator; Firm-Level Data;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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