We investigate which indicators of a firm's innovation activities are associated with financial constraints and analyse the nature and direction of causal links between innovation and financial constraints. By estimating simultaneous bivariate probit models on data from the UK Innovation...

We provide a direct, experimental test of the buffer stock model of savings behavior. We use a three-period inter-temporal model of consumption/savings decisions where liquidity in the second period is constrained (and, thus, borrowing is not possible). We contrast behavior in this constrained...

We examine how financial constraints in portfolios of suppliers affect cash holdings at the level of the customer. Utilizing a data set of private and public French companies and their suppliers, we show that customers rely on their financially unconstrained suppliers to provide them with backup...

We examine a large and unique panel containing survey and financial statement data on small and medium sized private enterprises (SMEs) in Germany from 1991 to 2011. From the survey data, we derive a financial constraints measure based on managers' self-perception. We find that our measure...

This paper identifies the effect of financing constraints on firms' labor demand. We exploit exogenous funding shocks to German savings banks during the US mortgage crisis that are unrelated to local conditions. We find that firms with credit relationships with affected banks experienced a...

We partnered with a micro-lender in Mali to randomize credit offers at the village level. Then, in no-loan control villages, we gave cash grants to randomly selected households. These grants led to higher agricultural investments and profits, thus showing that liquidity constraints bind with...

This paper studies the interplay between firm investment and cash flow hedging decisions when the decision-maker has time-inconsistent preferences. We show that cash flow hedging acts as a double-edged sword. In some cases, cash flow hedging enhances firm value because the firm can thus invest...

Measuring the extent to which a firm is financially constrained is critical in assessing capital structure. Extant measures of financial constraints focus on macro firm characteristics such as age and size – variables highly correlated with other firm attributes. We parse 10-K disclosures...

Firms often rely on external financing in order to conduct R&D. We ask to what extent discriminatory behaviour of the funds provider affects the industry evolution. The model is based on an evolutionary framework by Nelson and Winter. A firm chooses the amount of its R&D spending in an adaptive...

This paper investigates whether the Quantitative Easing (QE) program implemented by the Federal Reserve Board after the 2007-2008 global financial crisis affects firms in emerging economies by improving their access to external financing. Our hypothesis relies on the idea that the excess of...