Les Liaisons dangereuses: a Minskyan approach to the relation of credit and investment in Argentina during the 1990s
ABSTRACT We classify firms according to their financial behaviour in the short term using a Minskyan taxonomy that classifies firms as Hedge, Speculative and Ponzi. We measure financial constraints across that taxonomy using panel-data for Argentina during 1992--2001. After controlling for profitability we find that firms with an oppressed financial structure in the short term had to rely on their internal funds for long-term investment. We interpret this finding from a Minskyan/Keynesian framework arguing that credit allocation followed conventional rules about the quality of borrowers and not necessarily about the quality of the project. Because of being a highly unstable country, Argentinean firms' quality is defined on a short-term basis. Copyright The Author 2008. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.
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ABSTRACT: This paper develops a Post Keynesian model with Minskyan insights that places emphasis on the interaction between the banking sector and the real economy and investigates the conditions under which the latter is likely to be brought into financial fragility. The analytical framework used to describe the banking sector explicitly incorporates the impact of banks' 'animal spirits', of firms' creditworthiness and of banks' expectations on the provision of loans. The financial fragility of the economy is defined by drawing on Minsky's taxonomy and is assumed to rely both on the fragility of firms and on the fragility of the banking sector. Our dynamic analysis investigates how the interaction between the fragility ratio of the banking sector and the real output can generate financial structures that are susceptible to financial fragility. Furthermore, it briefly assesses the effect of institutional changes in the banking sector and of monetary policy on the emergence of financial fragility in the economy.
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ABSTRACT: This paper investigates the relationship between corporate investment in R&D and finance. By using panel data on Korean manufacturing firms between 1999 and 2008, we find that R&D investment is sensitive to fluctuations in internal cash flow and that debt is more important than equity in financing R&D expenditure. This empirical result supports the traditional theory of financing hierarchy. In relation to equity ownership, the empirical result shows that ownership concentration and foreign ownership positively affect R&D investment, but institutional ownership does not show any significant effect on investment. This study synthetically analyzes the relation between finance and investment by simultaneously considering corporate finance, equity ownership structure, macroeconomic environments and the institutional setting of Korea.Asian Economic Journal 06/2012; 26(2). · 0.30 Impact Factor