The Nexus between Bank Sources and Firms Capital Expenditures in SEE Countries
Considering that financial sources and investment opportunities are the starting point of the business decision to invest, this research focuses on answering whether a country's financial system contributes to the growth of firm investment, with regard to the endogenous economic growth theory...
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| Format: | Article |
| Language: | English |
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Danubius University
2018-10-01
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| Series: | Acta Universitatis Danubius: Oeconomica |
| Subjects: | |
| Online Access: | http://journals.univ-danubius.ro/index.php/oeconomica/article/view/4982/4594 |
| Summary: | Considering that financial sources and investment opportunities are the starting point of the
business decision to invest, this research focuses on answering whether a country's financial system
contributes to the growth of firm investment, with regard to the endogenous economic growth theory
based on which the financial system affects economic growth through capital accumulation. To test the
impact of external funds on the value of capital expenditures, the linear regression model is used, and
the results support the hypothesis that bank loans have a positive impact on the value of new fixed
assets. For robustness check, the logistic regression is utilized. In this model the dependent variable is
dichotomous, considering the fact if the business in the respective year had purchased fixed assets or
not, while as an explanatory variable, among others, are bank loans representing the fact if the business
in the same period had a credit or not with any commercial bank. The results show a positive and
significant connection between the bank loans and the newly purchased fixed assets. These findings
imply that firm investments in SEE countries are not financially constrained from banks. |
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| ISSN: | 2065-0175 2067-340X |