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An empirical analysis of the influence of financialization on investment in Russia
[journal article]
Abstract
This paper tries to estimate the impact of financialization on fixed investment in Russia. The work is carried out by using panel data based on reports of non-financial publicly listed companies for 1999-2019. The study finds that financial expenses aimed at paying interest on external financing and... view more
This paper tries to estimate the impact of financialization on fixed investment in Russia. The work is carried out by using panel data based on reports of non-financial publicly listed companies for 1999-2019. The study finds that financial expenses aimed at paying interest on external financing and paying dividends - that is, focusing on shareholder value, and hence decreasing the internal funds of companies, reduce real investments. Financial incomes have shown the crowding-out effect for large companies. Financial incomes as additional "free" funds in large companies are not perceived as an opportunity to accumulate fixed assets. Managers prefer to increase financial investments instead of real ones. In small and medium-sized companies, financial incomes, however, drive the growth of physical investment. This is because small firms, at a particular stage in their lives, find it more profitable to invest in their own growth. The results from the general sample, without dividing by size, indicate that financialization in Russia clearly reduces real investment.... view less
Keywords
investment; Russia
Classification
Financial Planning, Accountancy
Free Keywords
financialization; panel data; non-financial companies; Russian economy
Document language
English
Publication Year
2021
Page/Pages
p. 233-249
Journal
Russian Journal of Economics, 7 (2021) 3
ISSN
2618-7213
Status
Published Version; reviewed
Licence
Creative Commons - Attribution-Noncommercial-No Derivative Works 4.0