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Financial Market Imperfections and Investment: an Overview

Author

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  • Christian Calmès

    (UQO)

Abstract

The paper examines the interpretation of firms' investment-cash flow sensitivity as an artifact of financial market imperfection. Two alternative explanations of the financial constraints are compared. One is based on informational problems (asymmetric information). The other focuses on limited commitment between firms and financial intermediates. Empirical evidence of investment-cash flow sensitivity is discussed as well as some of the macroeconomic implications of financial market imperfections.

Suggested Citation

  • Christian Calmès, 2004. "Financial Market Imperfections and Investment: an Overview," Finance 0409031, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpfi:0409031
    Note: Type of Document - pdf; pages: 29
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/fin/papers/0409/0409031.pdf
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    Cited by:

    1. Christian Calmès & Denis Cormier & Francois Éric Racicot & Raymond Théoret, 2012. "Firms' Accruals and Tobin’s q," RePAd Working Paper Series UQO-DSA-wp032012, Département des sciences administratives, UQO.

    More about this item

    Keywords

    Financial Accelerator; Cash Flow; Financial Constraints; Overinvestment;

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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