Over the past decade, a number of researchers have extended conventional models of business fixed investment to … incorporate a role for financial constraints' in determining investment. This paper reviews developments and challenges in this … challenges. First, I describe analytical underpinnings of models of capital-market imperfections in the investment process, and …

1978-89. These datasets are used to estimate a range of empirical investment equations, and to investigate the role played … the suggestion that financial constraints on investment may be relatively severe in the more market-oriented UK financial …

companies. I test the joint hypothesis that 1) a decrease in cash/collateral decreases investment, holding fixed the … profitability of investment, and 2) the finance costs of different parts of the same corporation are interdependent. The results … support this joint hypothesis: oil companies significantly reduced their non-oil investment compared to the median industry …

research that uses cross-sectional differences in firm behavior to test for financing constraints on investment. This reply … of internal finance. Second, the KZ regression results (lower sensitivity of investment to cash flow for firms classified …

We examine the neoclassical investment model using a panel of U.S. manufacturing firms. The standard model with no … for firms with low (pre-sample) payouts (firms we expect to face financing constraints). Hem, investment is sensitive to … both firm cash flow and macroeconomic credit conditions, holding constant investment opportunities. Sample splits based on …

measures of liquidity on the investment decisions of U. K. firms. These variables are introduced via an extension of the Q … model of investment which explicitly includes agency/financial distress costs. We discuss if the significance of cash flow …

Most empirical models of investment rely on the assumption that firms are able to respond to prices set in centralized … determinant of investment spending, because of a "financing hierarchy," in which internal finance has important cost advantages … cost of capital, asset prices, or tax-based investment incentives. To the extent that firms are constrained in their …

We provide new evidence on how monetary policy affects investment and firm finance in the United States and the United … conditioning on size, asset growth, Tobin's Q, leverage or liquidity - and drive the response of aggregate investment. Older … and financial frictions in amplifying the effects of monetary policy on investment …