Inventory Investment, Global Engagement, and Financial Constraints in the UK: Evidence from Micro Data

We use a panel of 9381 UK firms to study the links between firms’ global engagement status and their financial health. We estimate inventory investment equations augmented with a financial composition variable, and interpret the sensitivity of inventory investment to the latter as a measure of the strength of the financial constraints faced by firms. We find that smaller, younger, and more risky firms; and firms that do not export and are not foreign owned exhibit higher sensitivities. Moreover, global engagement substantially reduces the sensitivities displayed by the former categories of firms: this suggests that it shields firms from financial constraints.Financial constraints, Global engagement, Inventory investment.

Subsidies, financial constraints and firm innovative activities in emerging economies

This paper investigates the relationship between public subsidies and firm innovation in emerging economies, which are likely to have less developed financial markets. Innovation includes the introduction of new products or services and the upgrade of existing ones, which is of particular relevance for these economies. The results obtained using alternative measures of financial constraints and market competition, within a range of econometric techniques, suggest a positive relation between public subsidies and the innovative activities of 11,998 firms across thirty Eastern Europe and Central Asia countries. This correlation is stronger for firms more likely to be financially constrained

Inventories and sales uncertainty

We investigate the empirical linkages between sales uncertainty and firms' inventory investment behavior while controlling for firms' financial strength. Using large panels of manufacturing firms from several European countries we find that higher sales uncertainty leads to larger stocks of inventories. We also identify an indirect effect of sales uncertainty on inventory accumulation through the financial strength of firms. Our results provide evidence that financial strength mitigates the adverse effects of uncertainty.inventory investment, uncertainty, financial constraints

Inventories and sales uncertainty

We investigate the empirical linkages between sales uncertainty and firms’ inventory investment behavior while controlling for firms’ financial strength. Using large panels of manufacturing firms from several European countries we find that higher sales uncertainty leads to larger stocks of inventories. We also identify an indirect effect of sales uncertainty on inventory accumulation through the financial strength of .rms. Our results provide evidence that financial strength mitigates the adverse effects of uncertainty.inventory investment, uncertainty, financial constraints.

No Going Back: The Interactions Between Processed Inventories and Trade Credit

Our paper focuses on testing the advantages in controlling the buyer and salvaging goods supplied where we have information on the nature of the transacted good and information on the inventory of buyers and sellers. We find transactions in specialized goods tend to be conducted more often using trade credit, but willingness to extend trade credit also depends on the ability of the firm to resell goods when demand is uncertain and on inventory costs. The advantages in salvage of goods is also limited by the extent to which goods have been processed by the receiving firm. These findings are derived from 82,000 French firms in four sectors over the period 1999-2007. Our results confirm the findings of the existing literature based on US and UK data, while also giving more support to the inventory transactions cost motive for firms with specialized goods.Trade credit, Inventories

Trade Credit, Bank Lending and Monetary Policy Transmission

This paper investigates the role of trade credit in the transmission of monetary policy. Most models of the transmission mechanism allow the firm to access only financial markets or bank lending according to some net worth criterion. In our model we introduce trade credit as an dditional source of funding. We predict that when monetary policy tightens there will be a reduction in market and bank lending, and an increase in trade credit. This is confirmed with an empirical investigation of 16,000 manufacturing firms.trade credit, bank lending, monetary policy transmission, credit channel

Should they stay or should they go? Attitudes towards immigration in Europe

This paper examines the main determinants of individual attitudes towards immigration in Europe. Our results suggest that both economic and non-economic variables shape attitudes towards immigration, but the relative importance of these factors depends crucially on the race/ethnicity of the arriving immigrants. While fears over labour market competition are more likely to shape attitudes towards the arrival of same race immigrants, more exposure to immigrants reduces opposition towards the arrival of different race immigrants. These findings persist after controlling for socioeconomic characteristics, and after exploiting the data to allow for cohort-specific effects