Iona, Alfonsina;
Calef, Andrea;
Georgiou, Ifigenia;
(2023)
Credit Market Freedom and Corporate Decisions.
Mathematics
, 11
(7)
, Article 1670. 10.3390/math11071670.
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Abstract
In this paper, we investigate whether and to what extent credit market freedom affects a firm’s target level of investment, cash holdings, and leverage. To do so, we generalize the standard empirical models, commonly used in the finance literature to estimate those targets, in order to incorporate credit market freedom into the set of regressors. We estimate three augmented models on a large and heterogeneous sample of North American nonfinancial firms over the period 2000–2019. Our empirical results suggest that greater credit market freedom is associated with a healthier corporate capital structure, higher financial flexibility, and a friendlier investment environment. Our paper contributes to both economic freedom and finance literatures by investigating an unexplored issue in economics and corporate finance research. In addition, it informs policymakers that promoting financial reforms that increase credit market freedom can boost a country’s economic growth.
| Type: | Article |
|---|---|
| Title: | Credit Market Freedom and Corporate Decisions |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.3390/math11071670 |
| Publisher version: | https://doi.org/10.3390/math11071670 |
| Language: | English |
| Additional information: | © 2023 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/). |
| Keywords: | economic freedom; corporate decisions; capital structure |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10206839 |
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