Investment slowdown in the 90s: small or large firms? Manufacturing or services industry?

Investment of French firms remained weak in the first part of the 90's, after allowing for the sluggish economic growth. Macroeconomic models failed to explain this low level. In this work, we examine the link between micro-level data and aggregate fluctuations. We first describe the evolution of investment using a large panel of French firms, distinguishing the size and the industry. We afterwards estimate an investment equation which enables us to check whether these firms were subject to financial constraints. Our main results are : (1) mark-up and leverage have larger significant effects for small firms during recessions than high-growth periods ; (2) Interest rate and mark-up play a more important role in the services industry than in the manufacturing industry ; (3) All the effects of studied determinants - i.e mark-up, leverage and interest rate - decrease with firm size ; (4) The biggest firms make their investment decisions independently of these determinants.