The delaying effect of financiing constraints on investment

M.M. van de Laar; W.A. Letterie

doi:10.1111/j.1467-8586.2004.00202.x

The delaying effect of financiing constraints on investment

M.M. van de Laar, W.A. Letterie

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Abstract

We develop a simple model in which a firm considers a number of investment projects. Because of limited financial resources, the firm can undertake at most one project. In line with the literature on real options we stress features like irreversibility, uncertainty and the possibility of postponing the investment decision and show under which conditions limited availability of funds tends to increase the value of waiting.

Original language	English
Pages (from-to)	271-282
Journal	Economics Bulletin
Volume	56
Issue number	3
DOIs	https://doi.org/10.1111/j.1467-8586.2004.00202.x
Publication status	Published - 1 Jan 2004

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10.1111/j.1467-8586.2004.00202.x

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abstract = "We develop a simple model in which a firm considers a number of investment projects. Because of limited financial resources, the firm can undertake at most one project. In line with the literature on real options we stress features like irreversibility, uncertainty and the possibility of postponing the investment decision and show under which conditions limited availability of funds tends to increase the value of waiting.",

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