Publication detail

Bankruptcy, Investment, and Financial Constraints: Evidence from the Czech Republic

Author(s): PhDr. Jiří Schwarz Ph.D., Pospíšil, Martin
Type: Articles in journals with impact factor
Year: 2018
Number: 0
Published in: Eastern European Economics, 56(2), 99-121
Publishing place:
Keywords: Bankruptcy, cash flow, credit rationing, financial constraints, investment, post-transition economy
JEL codes: D22, D92, E22, G32
Suggested Citation:
Abstract: Using investment--cash flow sensitivity to analyze financial constraints over the period 2006--2011 in the Czech Republic we find there is robust evidence that cash flow and the level of debt have a positive and significant impact on the investment rate. We reveal that the existence of financial constraints is evident mainly after 2008 and in micro and small enterprises. We do not uncover any evidence that firms going bankrupt faced more severe financial constraints. Moreover, companies going bankrupt had significantly higher levels of external debt and bank loans, and manifest lower investment--cash flow sensitivity, which indicates that they may have been less constrained than others.




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