20.500.12556/RUL-152935 The effects of financial frictions on Slovenian companies a panel VAR approach In this paper, we investigate the impact of imperfect financial markets on the business investment of Slovenian non-financial companies. We focus on exploring the borrower’s balance sheet channel, through which companies' worsening balance sheets, reduce the availability of external finance. The effects of exogenous shocks are, therefore, amplified through the financial accelerator mechanism and affect the overall economy. Using data from annual reports of Slovenian non-financial companies from 2005 to 2020, we estimate a panel VAR model on various sample definitions. The results confirm the existence of the balance sheet channel, as the impulse response of investment to cash flow shocks is statistically significant. This effect is especially noticeable during the period from 2006 to 2012. Our findings suggest that financial frictions affect the availability of external financing and, consequently, the investment activity of Slovenian non-financial companies. Policymakers should prioritize measures to ensure adequate external financing, particularly for financially constrained firms, to mitigate the negative impact of reduced economic activity during periods of financial distress and economic downturns. enterprises investments economic forecasting models balance sheet channel financial frictions business investment transmission channels panel VAR approach podjetje investicije modeli ekonomska predvidevanja modeli true false true Angleški jezik Slovenski jezik Članek v reviji 2023-12-12 14:15:57 2023-12-12 14:16:01 2023-12-13 03:41:48 0000-00-00 00:00:00 2023 0 0 16 str. pt. C, art. 104563 Vol. 58 Dec. 2023 0000-00-00 Zaloznikova Objavljeno NiDoloceno 0000-00-00 0000-00-00 0000-00-00 336 1544-6123 10.1016/j.frl.2023.104563 167898627 1-s2.0-S1544612323009352-main.pdf 1-s2.0-S1544612323009352-main.pdf 1 077D312C918D6C6A1DB9319FC8F3AD6A 0b252b033ba7672cc34b0f95865f3e8fe61981daaca7deff9073653a9f582b9c f5bc00d8-98f0-11ee-b821-0050569b8976 https://repozitorij.uni-lj.si/Dokument.php?lang=slv&id=178681 https://www.sciencedirect.com/science/article/pii/S1544612323009352 0 c8d18a4f-98f0-11ee-b821-0050569b8976 https://repozitorij.uni-lj.si/Dokument.php?lang=slv&id=178680 Ekonomska fakulteta 0 0 0