Investment in Polish manufacturing in the years 1996-2007and the role of sector's financial positions and general credit risk

Abstract

Modeling determinants of investment remains a difficult challenge. It is even more difficult in new market economies such as Poland, due to limited availability of high frequency data and changes in institutional and financial infrastructure. In the article, following the research already done for developed economies we study the relationship between financial pressure, and other variables and investment in Polish manufacturing. By augmenting the set of determinants by a dummy representing institutional factors we, for the first time for Polish manufacturing, allow for the impact of changes in the quality of institutional framework and in consequence get much better fit of the model. (original abstract)