Corporate fixed investment and internal liquidity: Evidence from Greek listed companies

Abstract

Utilizing a unique panel dataset of 273 listed firms in the Athens Stock Exchange (ASE) we explore the issue of capital market imperfections with respect to access to investment financing. In particular, we investigate the extent to which investment is sensitive to the availability of internal finance. By employing a fixed-effect model, our empirical results indicate a positive association of cash flow and investment, leading to the conclusion of imperfect substitutability between internal and external finance and thus the importance of the former for investment decisions. According to our knowledge, this is the first study covering the specific tremble period of ASE for Greek manufacturing firms.

What else lies behind the credit rationing? Exploring the issue of employment

“…The term credit rationing is used to describe situations in which either among loan applicants who appear to be identical, some receive a loan and others do not even if they are willing to pay higher interest rate; or there are identifiable groups of individuals in the population who, with given loan supply of credit, are unable to get a loan at any interest rate, even though with a larger supply of credit, they would. In this framework, the emphasis on capital market imperfections may have an important negative effect on real economic variables such as investment (Tybout, 1983; Oliner and Rudebusch, 1992; Carpenter and Rondi, 2000; Drakos and Kallandranis, 2005a, 2005b; Campello et al , 2010; Gerlach-Kristen et al , 2015; Kallandranis, 2019; Kallandranis et al , 2020 etc. ), real growth rates (Blinder and Stiglitz, 1983; Bencivenga and Smith, 1993), exports (Arkolakis, 2010; Cheng et al , 2021; Pietrovito and Pozzolo, 2021), productivity (Yu and Fu, 2021), inflation (Gao et al , 2012; Akinkoye et al , 2015), R&D and innovation activities (Santos and Cincera, 2022; Vlassas et al , 2023) and employment (Benmelech et al , 2011; Chodorow-Reich, 2014; Duygan-Bump et al , 2015).…”