Financialization and Investment Behaviour: Firm-level Evidence from Türkiye’s Cement Industry

Abstract

This study examines how financialization affects the investment behaviour of firms in Türkiye’s cement industry, a capital-intensive sector that is crucial for construction, infrastructure and industrial development. The analysis uses firm-level panel data for 10 publicly listed cement companies over the period 2008–2016. This time frame is chosen because consistent data on interest payments and financial items are available from 2008 onwards, while major mergers in 2017 significantly reduced firm-level data continuity thereafter. To capture both real and financial dimensions of investment, the study incorporates non-financial determinants (investment rate, capacity utilization and operating profit) alongside financial indicators (financial profit rate, borrowing cost, financial asset ratio and debt ratio). The investment rate is measured as capital expenditures relative to capital stock, while utilization is proxied by sales over capital stock. Given the dynamic nature of investment and potential endogeneity, the difference generalized method of moments estimator is employed to control for firm-specific effects, persistence and reverse causality. The results show strong investment persistence and a significant accelerator effect of capacity utilization. While operating profit is insignificant, financial profit and financial asset holdings positively affect investment, suggesting that financial income and liquidity buffers can support real investment. Debt has a negative but insignificant effect. Overall, the findings indicate that financialization exerts dual effects—reshaping firms’ financial strategies while also providing liquidity that can facilitate productive investment in an emerging market context.

JEL Classifications: G32, L61, E22

Keywords

Corporate investment capital-intensive industries cement sector firm-level panel data difference generalized method of moments Türkiye

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