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http://dspace.mediu.edu.my:8181/xmlui/handle/10419/18022| Title: | Modeling the Effects of Financial Constraints on Firm's Investment |
| Keywords: | E22 D92 ddc:330 Firm´s investment financial constraints Tobin´s marginal q uncertainty Investition Entscheidung bei Unsicherheit Finanzmarkt Unvollkommener Markt Tobin's Q Theorie |
| Issue Date: | 16-Oct-2013 |
| Publisher: | Kiel Institute for the World Economy (IfW) Kiel |
| Description: | The paper develops a model of firm´s investment under uncertainty with financial market imperfections and analyzes the effects of financial constraints on firm´s investment. Firm´s investment is an increasing function of the firm´s marginal q, however the investment function is characterized by an upper bound that depends on the firm´s borrowing capabilities. The firm´s marginal q is the sum of the expected value of the marginal profitability of the physical capital stock and of a positive external finance premium. In the presence of financial market imperfections the firm forms expectations about future financial conditions and these expectations raise the firm´s current marginal q. Similarly, the shadow price of firm´s debt is the sum of the interest cost of debt repayment and of a provision for external finance that depends on the firm´s expectations over future financial conditions. |
| URI: | http://koha.mediu.edu.my:8181/xmlui/handle/10419/18022 |
| Other Identifiers: | Economics: The Open-Access, Open-Assessment E-Journal 2 2008-9 1-26 doi:10.5018/economics-ejournal.ja.2008-9 doi:10.5018/economics-ejournal.ja.2008-9 http://hdl.handle.net/10419/18022 ppn:560131992 http://www.economics-ejournal.org/economics/journalarticles/2008-9 RePEc:zbw:ifweej:7126 |
| Appears in Collections: | EconStor |
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