The Effects of Financial Constraints on Inventory Investment

Evidence from a Panel of UK Firms

Bibliographic Data

ID9724217
AuthorsAlessandra Guariglia (0000-0001-5417-2615, University of Essex, corresponding author)
Year1999
Volume66
Issue261
Pages43-62
Publication date1999-02-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherWiley (PUBLISHER • GB)
DOI10.1111/1468-0335.00155
OpenAlexW2005791247
LanguageEN
Citations received9
References cited6

The objective of this paper is to analyse the linkage between internalfinance and inventory investment, using a large panel of UK manufacturing firms from 1968 to 1991. Firms are classified into two groups: those more and those less likely to face financial constraints. The estimates of several equations for inventory growth augmented with the coverage ratio indicate a significant effect of the latter on inventory investment for the former group, during periods of recession and tight monetary policy. This effect is particularly strong for work‐in‐process and raw material inventories which are characterized by low adjustment costs

Business · Econometrics · Economics · Inventory investment · Investment (military) · Linkage (software) · Macroeconomics · Monetary economics · Panel data · Recession · Work (physics) · Corporate Finance and Governance · Finance · Firm Innovation and Growth · Working Capital and Financial Performance

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