Examining the impact of debt on investment for Austrian non-financial sectors and
Using a micro-level model of investment, this paper finds that firm-debt and investment
are negatively associated across firms in Austrian manufacturing industries. The finding
is robust to various changes to the model specification. Moreover, in an extension
of the basic model, different components of debt are examined, pointing out that debt
owed to banks and long-term debt have a stronger negative effect than other forms
of debt. Comparisons with investment models estimated for other European countries
suggest that the impact of debt on investment is more negative in Austria than elsewhere.
Results from interaction models of debt owed to banks with an index of credit easing
show that firms in industries which are more bank-dependent invest relatively more
than firms in industries that are less bank-dependent after an easing of credit conditions.
Published on December 17, 2021
In series:OECD Economics Department Working Papersview more titles