Does economic policy uncertainty aggravate financial constraints?
This paper examines the impact of economic policy uncertainty on economic growth due to its effects on firms' investment decisions, which subsequently justify firms' financial constraints. Using a sample of Chinese listed firms, the study documents that economic policy uncertainty reduce f...
Saved in:
| Main Authors: | , , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
2022
|
| Subjects: | |
| Online Access: | https://doi.org/10.1080/10291954.2021.1885233 http://hdl.handle.net/11408/4789 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1779905661670260736 |
|---|---|
| author | Makosa, Lewis Jie, Sun Bonga, Wellington Garikai Jachi, Moses Sitsha, Lovemore |
| author_facet | Makosa, Lewis Jie, Sun Bonga, Wellington Garikai Jachi, Moses Sitsha, Lovemore |
| author_sort | Makosa, Lewis |
| collection | DSpace |
| description | This paper examines the impact of economic policy uncertainty on economic growth due to its effects on firms' investment decisions, which subsequently justify firms' financial constraints. Using a sample of Chinese listed firms, the study documents that economic policy uncertainty reduce firms' financial constraints. The reduction in financial constraints stems mainly from the decrease in investments which increases the firm’s cash holding. Additional tests reveal that the reduction in firms’ financial constraints is pronounced more among non-politically connected firms compared to their counterparts. Further tests reveal that a reduction in a firms' financial constraints is of a short-term nature. In the long run, economic policy uncertainty increase firms' financial constraints. The study recommends that changes in policies must be done carefully to avoid turbulence and friction in firms’ investment decisions. |
| format | Article |
| id | ir-11408-4789 |
| institution | My University |
| language | English |
| publishDate | 2022 |
| record_format | dspace |
| spelling | ir-11408-47892022-06-27T13:49:06Z Does economic policy uncertainty aggravate financial constraints? Makosa, Lewis Jie, Sun Bonga, Wellington Garikai Jachi, Moses Sitsha, Lovemore Economic growth Economic policy uncertainty Investment Financial constraints This paper examines the impact of economic policy uncertainty on economic growth due to its effects on firms' investment decisions, which subsequently justify firms' financial constraints. Using a sample of Chinese listed firms, the study documents that economic policy uncertainty reduce firms' financial constraints. The reduction in financial constraints stems mainly from the decrease in investments which increases the firm’s cash holding. Additional tests reveal that the reduction in firms’ financial constraints is pronounced more among non-politically connected firms compared to their counterparts. Further tests reveal that a reduction in a firms' financial constraints is of a short-term nature. In the long run, economic policy uncertainty increase firms' financial constraints. The study recommends that changes in policies must be done carefully to avoid turbulence and friction in firms’ investment decisions. 2022-04-01T09:47:18Z 2022-04-01T09:47:18Z 2021 Article https://doi.org/10.1080/10291954.2021.1885233 http://hdl.handle.net/11408/4789 en South African Journal of Accounting Research;Vol.35; No. 2: p. 151-166 open |
| spellingShingle | Economic growth Economic policy uncertainty Investment Financial constraints Makosa, Lewis Jie, Sun Bonga, Wellington Garikai Jachi, Moses Sitsha, Lovemore Does economic policy uncertainty aggravate financial constraints? |
| title | Does economic policy uncertainty aggravate financial constraints? |
| title_full | Does economic policy uncertainty aggravate financial constraints? |
| title_fullStr | Does economic policy uncertainty aggravate financial constraints? |
| title_full_unstemmed | Does economic policy uncertainty aggravate financial constraints? |
| title_short | Does economic policy uncertainty aggravate financial constraints? |
| title_sort | does economic policy uncertainty aggravate financial constraints? |
| topic | Economic growth Economic policy uncertainty Investment Financial constraints |
| url | https://doi.org/10.1080/10291954.2021.1885233 http://hdl.handle.net/11408/4789 |
| work_keys_str_mv | AT makosalewis doeseconomicpolicyuncertaintyaggravatefinancialconstraints AT jiesun doeseconomicpolicyuncertaintyaggravatefinancialconstraints AT bongawellingtongarikai doeseconomicpolicyuncertaintyaggravatefinancialconstraints AT jachimoses doeseconomicpolicyuncertaintyaggravatefinancialconstraints AT sitshalovemore doeseconomicpolicyuncertaintyaggravatefinancialconstraints |