ABSTRACT
Today there is extensive literature on various aspects of economic development and on aspects such as interest rate, inflation, exchange rate and taxation and their different combinations. Some econometric studies try and explain the link between the interest rate spread and the remaining factors and several other variables such as non-performing loans, reserve requirements, lending interest rate and financial taxation. Literature in each area is comprehensive and several reviews provide overviews of the research field. For instance, Bernanke (1990) studied stylized empirical results on firms’ financial constraints and the effects that they had on firms. The author found that financial constraints hindered firms’ abilities to carry out their optimal investment and growth trajectories. The severity of the constraints depended on institutional and firm-specific characteristics and the nature of investment projects. Balogun et al. (2016) provide a survey of financial liberalization in sub-Saharan Africa aimed at reversing the ill effects of financial repression. The authors find evidence of diverse and contrasting effects on savings, investments and economic growth. In another study Roache (2007) offers a systematic review of the importance of R&D investments in explaining economic growth and the effectiveness of public R&D policies in crowding-in private R&D investments. Vanacker and Deloof (2015) investigated the evolution of entrepreneurial firms’ debt policies. A firm’s debt policy was found stable over time and in determining its future debt policies.
