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Did Glass-Steagall Increase the Cost of External Finance for Corporate Investment?: Evidence From Bank and Insurance Company Affiliations

Published online by Cambridge University Press:  03 March 2009

Carlos D. Ramírez
Carlos D. Ramírez
Affiliation:
Assistant Professor, Department of Economics, George Mason University, Fairfax, VA 22030, Phone (703) 993-1145, Fax (703) 993-1133. E-mail [email protected].
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Abstract

The Glass-Steagall Act may have increased the cost for corporations of raising external funds for investment spending. Significant differences are found in the way financial institutions influenced corporate investment spending. Investment regressions for a sample of companies affiliated to financial institutions are estimated and compared to those for a control sample. Prior to Glass-Steagall, affiliated companies do not display any sensitivity between investment spending and internal measures of liquidity, whereas the control sample does.

Type
Articles
Information
The Journal of Economic History , Volume 59 , Issue 2 , June 1999 , pp. 372 - 396
Copyright
Copyright © The Economic History Association 1999

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