This paper investigates the link between corporate debt and investment for a group of five peripheral euro area … countries. Using firm-level data from 2005-2014, we postulate a non-linear corporate leverage-investment relationship and derive … thresholds beyond which leverage has a negative and significant impact on investment. The investment sensitivity of debt …

decisions. If going far beyond this, in particular if successfully influencing policy makers to unnecessarily tighten regulation …

, though cannot equally well capture differences in the investment ratios. The conclusion that we draw is that consumption …

) preference shocks ("savings glutʺ hypothesis), and (iii) investment shocks ("investment droughtʺ hypothesis). In order to … imbalances and financial market prices. We find that savings shocks and investment shocks explain less of the variation. Hence, a …

their investment more after the crisis. This negative effect is stronger for firms linked to weak banks with exposures to … corporate investment. …

has partial control over bank regulation it can exercise regulatory lenience. Two, the Fed's stronger output orientation … procyclical capital regulation. - Monetary policy ; capital regulation ; crisis …