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- Title
The Effects of Financial Constraints on Inventory Investment: Evidence from a Panel of UK Firms.
- Authors
Guariglia, Alessandra
- Abstract
The objective of this paper is to analyse the linkage between internal finance 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.
- Subjects
UNITED Kingdom; INDUSTRIES; INVENTORIES; MANUFACTURING industries; MONETARY policy; BUSINESS turnover
- Publication
Economica, 1999, Vol 66, Issue 261, p43
- ISSN
0013-0427
- Publication type
Article
- DOI
10.1111/1468-0335.00155