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Publication Detailed Description
Journal Title
Journal of Post Keynesian Economics
Year (definitive publication)
2017
Language
English
Country
United Kingdom
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Abstract
The article makes an empirical analysis of the relationship between financialization and real investment by Portuguese nonfinancial corporations from 1979 to 2013. In theory, while financialization leads to a rise in financial investments by nonfinancial corporations and thus deviates funds from real investment, it also intensifies the pressure for financial payments and therefore restricts the funds available for real investment. We estimate an aggregate investment function including control variables (profitability, debt, cost of capital and output growth) and two measures of financialization (financial receipts and financial payments). The study concludes that there is a long-term investment equation, and finds evidence that the process of financialization has hampered real investment largely as a result of financial payments. The article also finds that profitability and debt are both detrimental to real investment.
Acknowledgements
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Keywords
Financialization,Investment,Vector Error Correction Model
Fields of Science and Technology Classification
- Economics and Business - Social Sciences
Funding Records
| Funding Reference | Funding Entity |
|---|---|
| UID/SOC/03127/2013 | Fundação para a Ciência e a Tecnologia |
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