The impact of financial constraints on investment efficiency in South Africa

Oluwaseyi Olopade; Beatrice D. Simo-Kengne; Abieyuwa Ohonba

doi:10.17811/ebl.11.3.2022.125-133

The impact of financial constraints on investment efficiency in South Africa

Oluwaseyi Olopade, Beatrice D. Simo-Kengne, Abieyuwa Ohonba

School of Economics

University of Johannesburg

Research output: Contribution to journal › Article › peer-review

Abstract

Shifts from firm-level investment efficiency occur due to market imperfections and information asymmetry. This translates to an increased cost of capital, which leads to over or under-investments. This study demonstrates the absence of a direct association between investment efficiency and financial constraints in African firms, complementing the efficient market hypothesis. We observed firms across different industries listed on the JSE from 2009 to 2019. Empirical results from panel data analysis reveal that financial constraints drive improved investment levels and firms in this region depend on external funds – specifically credits – to invest.

Original language	English
Pages (from-to)	125-133
Number of pages	9
Journal	Economics and Business Letters
Volume	11
Issue number	3
DOIs	https://doi.org/10.17811/ebl.11.3.2022.125-133
Publication status	Published - Sept 2022

Keywords

Financial constraints
Investment efficiency
Panel data

ASJC Scopus subject areas

Business and International Management
General Economics,Econometrics and Finance

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.17811/ebl.11.3.2022.125-133

Cite this

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The impact of financial constraints on investment efficiency in South Africa

Abstract

Keywords

ASJC Scopus subject areas

UN SDGs

Access to Document

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