Demir, Firat (2007): Private Investment, Portfolio Choice and Financialization of Real Sectors in Emerging Markets.
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Using micro level panel data, we analyze the impacts of rates of return gap between fixed and financial investments under uncertainty on real investment performance in three emerging markets, Argentina, Mexico and Turkey. Employing a portfolio choice model to explain the low fixed investment rates in developing countries during the 1990s, we suggest that rather than investing on risky and irreversible long term fixed investment projects, firms may choose to invest on reversible short term financial investments depending on respective rates of returns and uncertainty in the economy. The empirical results show that increasing rates of return gap and uncertainty have an economically and statistically significant fixed investment reducing effects in all three countries while the opposite is true with respect to financial investments.
|Item Type:||MPRA Paper|
|Institution:||University of Oklahoma|
|Original Title:||Private Investment, Portfolio Choice and Financialization of Real Sectors in Emerging Markets|
|Keywords:||Private Investment; Portfolio Choice; Uncertainty; Financialization|
|Subjects:||C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models
D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance
G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity
|Depositing User:||Firat Demir|
|Date Deposited:||05. Jul 2007|
|Last Modified:||18. Feb 2013 20:47|
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