The impact of financial position on investment: an anlysis for non-financial corporations in the euro area

Arbeitspapier

This paper analyses the impact that firms financial position has on investment decisions using panel data from a large sample of non-financial corporations(around 120,000 firms) in six euro area countries(Belgium, Germany, France, Italy, the Netherlands and Spain). The results indicate that financial position is important to explain capital expenditures, as financial pressure appears relevant in explaining investment dynamics when it is proxied by cash flow, indebtedness and debt burden. The results also show di¤erences in the sensitivity of investment rates to changes in financial pressure across countries, which appears to be especially large in the Netherlands and Italy and relatively small in Germany.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 943

Classification and Topics

• Classification: Wirtschaft ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models ; Investment; Capital; Intangible Capital; Capacity ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Labor Demand
• Subject: balance sheet channel ; Financial pressure ; fixed investment ; panel data ; Investitionsentscheidung ; Investitionspolitik ; Unternehmensfinanzierung ; Kapitalstruktur ; Belgien ; Deutschland ; Frankreich ; Italien ; Niederlande ; Spanien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Martinez-Carrascal, Carmen ; Ferrando, Annalisa
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/153377
• Last update: 10.03.2025, 11:42 AM CET