Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82417
Authors: 
Hansen, Sten
Year of Publication: 
1999
Series/Report no.: 
Sveriges Riksbank Working Paper Series 79
Abstract: 
The importance of credit market imperfections for investment behavior is analyzed using Swedish firm level data. Adjustment and agency costs are included in the neoclassical theory of optimal financial and investment decisions for firms. In order to model the possible occurrence of agency costs of debt, and credit constraints, the behavior of banks is reviewed in the light of the theory of imperfect information. The econometric results indicate that investments are a¤ected by both adjustment and agency costs, but not by credit constraints. Moreover, it is also shown that financial decisions are a¤ected by agency costs. Finally, there is evidence of credit constraints prior to financial deregulation, but not specifically for small or independent firms.
Subjects: 
Credit constraints
Debt externalities
Expected marginal tax rate
Investment
Monitoring costs
JEL: 
D92
G31
Document Type: 
Working Paper

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