|
EconStor >
Institut für Weltwirtschaft (IfW), Kiel >
Economics: The Open-Access, Open-Assessment E-Journal - Journal Articles >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/18022
|
| | |
| Title: | | Modeling the Effects of Financial Constraints on Firm's Investment  |
| Authors: | | Tomat, Gian Maria |
| Issue Date: | | 2008 |
| Citation: | | [Journal:] Economics: The Open-Access, Open-Assessment E-Journal [Volume:] 2 [Issue:] 2008-9 [Pages:] 1-26 [DOI/URN:] doi:10.5018/economics-ejournal.ja.2008-9 |
| Series/Report no.: | | economics - The Open-Access, Open-Assessment E-Journal 2008-9 |
| Abstract: | | 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. |
| Subjects: | | Firm´s investment financial constraints Tobin´s marginal q uncertainty |
| JEL: | | E22 D92 |
| Persistent Identifier of the first edition: | | doi:10.5018/economics-ejournal.ja.2008-9 |
| URL of the first edition: | | http://www.economics-ejournal.org/economics/journalarticles/2008-9 |
| Creative Commons License: | |  |
| Document Type: | | Article |
| Appears in Collections: | | Economics: The Open-Access, Open-Assessment E-Journal - Journal Articles
|
| Files in This Item:
| |
|
| No. of Downloads:
| |
| last Month |
last 3 Month |
total |
|
|
|
|
|
| |
| | |
Download bibliographical data as:
BibTeX
|
| |
Share on:http://hdl.handle.net/10419/18022
|
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.
|