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Multiple Market Imperfections, Firm Profitability and Investment

  • 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")

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.

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File URL: http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_13_05.pdf
File Function: First version, 2013
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Paper provided by University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini in its series Working Papers with number 1305.

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Length: 33 pages
Date of creation: 2013
Date of revision: 2013
Handle: RePEc:urb:wpaper:13_05
Contact details of provider: Web page: http://www.econ.uniurb.it/

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