Capital Investment and Determinants of Financial Constraints in Estonia

Bersant Hobdari, Derek C. Jones, Niels Mygind

    Research output: Contribution to journalJournal articleResearchpeer-review

    Abstract

    Unlike previous empirical work concerning investment behavior and the determinants of liquidity constraints, we use a switching regression framework when sample separation is unknown and endogenous and firms are assumed to operate either in the financially constrained or in the financially unconstrained regime. By using new panel data for Estonian companies during 1993–2002 we find that: (i) investment behavior is characterized by two distinct regimes; (ii) the likelihood of being financially constrained is higher in firms that are recently privatized, small and where ownership is concentrated in the hands of insiders and the state; (iii) the actual probabilities of operating in the financially constrained regime are quite high and essentially stable during the whole period under consideration; (iv) ownership structure affects investment beyond its indirect effects through financial constraints.
    Original languageEnglish
    JournalEconomic Systems
    Volume33
    Issue number4
    Pages (from-to)344-359
    Number of pages16
    ISSN0939-3625
    DOIs
    Publication statusPublished - 2009

    Cite this

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    title = "Capital Investment and Determinants of Financial Constraints in Estonia",
    abstract = "Unlike previous empirical work concerning investment behavior and the determinants of liquidity constraints, we use a switching regression framework when sample separation is unknown and endogenous and firms are assumed to operate either in the financially constrained or in the financially unconstrained regime. By using new panel data for Estonian companies during 1993–2002 we find that: (i) investment behavior is characterized by two distinct regimes; (ii) the likelihood of being financially constrained is higher in firms that are recently privatized, small and where ownership is concentrated in the hands of insiders and the state; (iii) the actual probabilities of operating in the financially constrained regime are quite high and essentially stable during the whole period under consideration; (iv) ownership structure affects investment beyond its indirect effects through financial constraints.",
    author = "Bersant Hobdari and Jones, {Derek C.} and Niels Mygind",
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    Capital Investment and Determinants of Financial Constraints in Estonia. / Hobdari, Bersant; Jones, Derek C.; Mygind, Niels.

    In: Economic Systems, Vol. 33, No. 4, 2009, p. 344-359.

    Research output: Contribution to journalJournal articleResearchpeer-review

    TY - JOUR

    T1 - Capital Investment and Determinants of Financial Constraints in Estonia

    AU - Hobdari, Bersant

    AU - Jones, Derek C.

    AU - Mygind, Niels

    PY - 2009

    Y1 - 2009

    N2 - Unlike previous empirical work concerning investment behavior and the determinants of liquidity constraints, we use a switching regression framework when sample separation is unknown and endogenous and firms are assumed to operate either in the financially constrained or in the financially unconstrained regime. By using new panel data for Estonian companies during 1993–2002 we find that: (i) investment behavior is characterized by two distinct regimes; (ii) the likelihood of being financially constrained is higher in firms that are recently privatized, small and where ownership is concentrated in the hands of insiders and the state; (iii) the actual probabilities of operating in the financially constrained regime are quite high and essentially stable during the whole period under consideration; (iv) ownership structure affects investment beyond its indirect effects through financial constraints.

    AB - Unlike previous empirical work concerning investment behavior and the determinants of liquidity constraints, we use a switching regression framework when sample separation is unknown and endogenous and firms are assumed to operate either in the financially constrained or in the financially unconstrained regime. By using new panel data for Estonian companies during 1993–2002 we find that: (i) investment behavior is characterized by two distinct regimes; (ii) the likelihood of being financially constrained is higher in firms that are recently privatized, small and where ownership is concentrated in the hands of insiders and the state; (iii) the actual probabilities of operating in the financially constrained regime are quite high and essentially stable during the whole period under consideration; (iv) ownership structure affects investment beyond its indirect effects through financial constraints.

    U2 - 10.1016/j.ecosys.2009.05.004

    DO - 10.1016/j.ecosys.2009.05.004

    M3 - Journal article

    VL - 33

    SP - 344

    EP - 359

    JO - Economic Systems

    JF - Economic Systems

    SN - 0939-3625

    IS - 4

    ER -