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Multiple Market Imperfections, Firm Profitability and Investment

Author

Listed:
  • Giorgio Calcagnini

    () (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")

  • Annalisa Ferrando

    () (European Central Bank Frankfurt)

  • Germana Giombini

    () (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo")

Abstract

This paper investigates the impact of the interaction between product, labor and financial market imperfections on firms’ investment by using a panel data of European firms over the period 1994-2008. It studies the impact of product and labor market regulations on firm investment and how it changes with the degree of financial market imperfections. Findings show that product and labor market regulations negatively affect firm investment by lowering firm profitability. The presence of more efficient financial markets increases firm investment and lowers the negative effects of market regulations.

Suggested Citation

  • Giorgio Calcagnini & Annalisa Ferrando & Germana Giombini, 2013. "Multiple Market Imperfections, Firm Profitability and Investment," Working Papers 1305, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2013.
    • Handle: RePEc:urb:wpaper:13_05
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Setzer, Ralph & Stieglitz, Moritz, 2019. "Firm-level employment, labour market reforms, and bank distress," Working Paper Series 2334, European Central Bank.
    2. Kose,Ayhan & Ohnsorge,Franziska Lieselotte & Ye,Lei Sandy & Islamaj,Ergys, 2017. "Weakness in investment growth : causes, implications and policy responses," Policy Research Working Paper Series 7990, The World Bank.
    3. Giorgio Calcagnini & Germana Giombini & Giuseppe Travaglini, 2015. "The productivity gap among European countries," Working Papers 1510, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2015.
    4. Germana Giombini & Francesco Perugini & Giuseppe Travaglini, 2017. "The productivity slowdown puzzle of European countries: a focus on Italy," Argomenti, University of Urbino Carlo Bo, Department of Economics, Society & Politics, vol. 6(6), pages 1-20, January-A.
    5. repec:spr:epolit:v:35:y:2018:i:3:d:10.1007_s40888-018-0108-4 is not listed on IDEAS
    6. repec:eee:streco:v:50:y:2019:i:c:p:237-244 is not listed on IDEAS
    7. repec:taf:regstd:v:51:y:2017:i:9:p:1336-1347 is not listed on IDEAS
    8. Setzer, Ralph & Stieglitz, Moritz, 2019. "Firm-level employment, labour market reforms, and bank distress," IWH Discussion Papers 15/2019, Halle Institute for Economic Research (IWH).
    9. repec:eee:reveco:v:55:y:2018:i:c:p:1-20 is not listed on IDEAS

    More about this item

    Keywords

    Investment; Regulation Impact; EPL; Financial Market Development.;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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