Publication

Financialization and Portuguese real investment: a supportive or disruptive relationship?

Bibliographic Details
Summary: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.
Subject:Vector error correction model Financialization Vector Error Correction Model Investment
Year:2018
Country:Portugal
Document type:journal article
Access type:Open
Associated institution:Repositório ISCTE, RCIPL, Repositório Científico do Instituto Politécnico de Lisboa
Language:English
Origin:Repositório ISCTE

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