Liquidity Constraints and Investment in Transition Economies : The Case of Bulgaria
The authors use firm level data on Bulgaria to investigate the impact of liquidity constraints on firms investment performance. Internal funds are a important determinant of investment in most industrial economies. The authors use a simple accelera...
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| Format: | Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2000/01/438413/liquidity-constraints-investment-transition-economies-case-bulgaria http://hdl.handle.net/10986/22280 |
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okr-10986-222802021-04-23T14:04:07Z Liquidity Constraints and Investment in Transition Economies : The Case of Bulgaria Budina, Nina Garretsen, Harry de Jong, Eelke ADVERSE SELECTION ASSETS ASYMMETRIC INFORMATION BAD DEBT BAD DEBTS BALANCE SHEET BANK CAPITAL BANK LOANS BANK PORTFOLIOS BANKING SECTOR BANKING SYSTEM BANKRUPTCY BANKRUPTCY PROCEDURES BANKS BORROWING CAPITAL MARKETS CASH FLOWS CENTRALLY PLANNED ECONOMIES CENTRALLY PLANNED ECONOMY COMMERCIAL BANKS COST OF CAPITAL CREDIT RATIONING DEBT DEPRECIATION DIVIDEND POLICY ECONOMIC GROWTH EMPIRICAL ANALYSIS EMPIRICAL STUDIES EXCHANGE RATE EXOGENOUS VARIABLES EXPECTED RETURN EXPENDITURES FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL RESOURCES FINANCIAL SECTOR FINANCIAL STRUCTURE GDP INDUSTRIAL ECONOMIES INFLATION INHERITANCE LIQUIDATION LIQUIDITY MACROECONOMICS MARKET ECONOMIES MARKET INCENTIVES MARKET VALUE MORAL HAZARD NET LOSS NET WORTH PERFECT INFORMATION PERVERSE INCENTIVES PORTFOLIOS PRIVATE BANKS PROFITABILITY SHORT TERM DEBT SOFT BUDGET CONSTRAINTS STATE ENTERPRISES TANGIBLE ASSETS TIME SERIES TRANSITION ECONOMIES LIQUIDITY CONTROLS The authors use firm level data on Bulgaria to investigate the impact of liquidity constraints on firms investment performance. Internal funds are a important determinant of investment in most industrial economies. The authors use a simple accelerator model of investment to test whether liquidity constraints are relevant in Bulgaria's case. Their estimates are based on data for 1993-95, before Bulgaria's financial crisis of 1996-97. It turns out that Bulgarian firms are liquidity-constrained and that firms size and financial structure help to distinguish between firms that are more and less liquidity-constrained. In the authors' view, liquidity constraints in transition economies should be interpreted in different ways than those in industrial economies. In Bulgaria, liquidity constraints, and hence access to external funds should be seen in the context of soft budget constraints and the financial systems failure to enforce the efficient allocation of funds. The relationship between liquidity constraints and firm characteristics may actually be the opposite of what is normally the case in industrial countries. In Bulgaria, lack of liquidity constraints may be a sign of financial weakness. 2015-07-23T15:32:58Z 2015-07-23T15:32:58Z 2000-01 Working Paper http://documents.worldbank.org/curated/en/2000/01/438413/liquidity-constraints-investment-transition-economies-case-bulgaria http://hdl.handle.net/10986/22280 English en_US Policy Research Working Paper;No. 2278 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia Europe and Central Asia Bulgaria |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ADVERSE SELECTION ASSETS ASYMMETRIC INFORMATION BAD DEBT BAD DEBTS BALANCE SHEET BANK CAPITAL BANK LOANS BANK PORTFOLIOS BANKING SECTOR BANKING SYSTEM BANKRUPTCY BANKRUPTCY PROCEDURES BANKS BORROWING CAPITAL MARKETS CASH FLOWS CENTRALLY PLANNED ECONOMIES CENTRALLY PLANNED ECONOMY COMMERCIAL BANKS COST OF CAPITAL CREDIT RATIONING DEBT DEPRECIATION DIVIDEND POLICY ECONOMIC GROWTH EMPIRICAL ANALYSIS EMPIRICAL STUDIES EXCHANGE RATE EXOGENOUS VARIABLES EXPECTED RETURN EXPENDITURES FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL RESOURCES FINANCIAL SECTOR FINANCIAL STRUCTURE GDP INDUSTRIAL ECONOMIES INFLATION INHERITANCE LIQUIDATION LIQUIDITY MACROECONOMICS MARKET ECONOMIES MARKET INCENTIVES MARKET VALUE MORAL HAZARD NET LOSS NET WORTH PERFECT INFORMATION PERVERSE INCENTIVES PORTFOLIOS PRIVATE BANKS PROFITABILITY SHORT TERM DEBT SOFT BUDGET CONSTRAINTS STATE ENTERPRISES TANGIBLE ASSETS TIME SERIES TRANSITION ECONOMIES LIQUIDITY CONTROLS |
| spellingShingle |
ADVERSE SELECTION ASSETS ASYMMETRIC INFORMATION BAD DEBT BAD DEBTS BALANCE SHEET BANK CAPITAL BANK LOANS BANK PORTFOLIOS BANKING SECTOR BANKING SYSTEM BANKRUPTCY BANKRUPTCY PROCEDURES BANKS BORROWING CAPITAL MARKETS CASH FLOWS CENTRALLY PLANNED ECONOMIES CENTRALLY PLANNED ECONOMY COMMERCIAL BANKS COST OF CAPITAL CREDIT RATIONING DEBT DEPRECIATION DIVIDEND POLICY ECONOMIC GROWTH EMPIRICAL ANALYSIS EMPIRICAL STUDIES EXCHANGE RATE EXOGENOUS VARIABLES EXPECTED RETURN EXPENDITURES FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL RESOURCES FINANCIAL SECTOR FINANCIAL STRUCTURE GDP INDUSTRIAL ECONOMIES INFLATION INHERITANCE LIQUIDATION LIQUIDITY MACROECONOMICS MARKET ECONOMIES MARKET INCENTIVES MARKET VALUE MORAL HAZARD NET LOSS NET WORTH PERFECT INFORMATION PERVERSE INCENTIVES PORTFOLIOS PRIVATE BANKS PROFITABILITY SHORT TERM DEBT SOFT BUDGET CONSTRAINTS STATE ENTERPRISES TANGIBLE ASSETS TIME SERIES TRANSITION ECONOMIES LIQUIDITY CONTROLS Budina, Nina Garretsen, Harry de Jong, Eelke Liquidity Constraints and Investment in Transition Economies : The Case of Bulgaria |
| geographic_facet |
Europe and Central Asia Europe and Central Asia Bulgaria |
| relation |
Policy Research Working Paper;No. 2278 |
| description |
The authors use firm level data on
Bulgaria to investigate the impact of liquidity constraints
on firms investment performance. Internal funds are a
important determinant of investment in most industrial
economies. The authors use a simple accelerator model of
investment to test whether liquidity constraints are
relevant in Bulgaria's case. Their estimates are based on
data for 1993-95, before Bulgaria's financial crisis of
1996-97. It turns out that Bulgarian firms are
liquidity-constrained and that firms size and financial
structure help to distinguish between firms that are more
and less liquidity-constrained. In the authors' view,
liquidity constraints in transition economies should be
interpreted in different ways than those in industrial
economies. In Bulgaria, liquidity constraints, and hence
access to external funds should be seen in the context of
soft budget constraints and the financial systems failure to
enforce the efficient allocation of funds. The relationship
between liquidity constraints and firm characteristics may
actually be the opposite of what is normally the case in
industrial countries. In Bulgaria, lack of liquidity
constraints may be a sign of financial weakness. |
| format |
Working Paper |
| author |
Budina, Nina Garretsen, Harry de Jong, Eelke |
| author_facet |
Budina, Nina Garretsen, Harry de Jong, Eelke |
| author_sort |
Budina, Nina |
| title |
Liquidity Constraints and Investment in Transition Economies : The Case of Bulgaria |
| title_short |
Liquidity Constraints and Investment in Transition Economies : The Case of Bulgaria |
| title_full |
Liquidity Constraints and Investment in Transition Economies : The Case of Bulgaria |
| title_fullStr |
Liquidity Constraints and Investment in Transition Economies : The Case of Bulgaria |
| title_full_unstemmed |
Liquidity Constraints and Investment in Transition Economies : The Case of Bulgaria |
| title_sort |
liquidity constraints and investment in transition economies : the case of bulgaria |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://documents.worldbank.org/curated/en/2000/01/438413/liquidity-constraints-investment-transition-economies-case-bulgaria http://hdl.handle.net/10986/22280 |
| _version_ |
1764450593020051456 |