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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.

Suggested Citation

  • Michele Cincera, 2002. "Financing constraints, fixed capital and R&D investment decisions of belgian firms," Working Paper Research 32, National Bank of Belgium.
    • Handle: RePEc:nbb:reswpp:200205-13
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    More about this item

    Keywords

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

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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