Author(s)

Fangping Peng¹, Richard Cebula², Maggie Foley², Xinming Hu³, Zhetan Zhang^1*

¹Business School, Sun Yat-sen University, Guangzhou, China.
²Davis College of Business, Jacksonville University, Jacksonville, Florida, USA.
³Financial School, Guangdong University of Finance & Economics, Guangzhou, China.

In this study, the panel smooth transition model will be used to analyze the nonlinear relationship between debt and investment. It can be inferred from the results that debt drives investment when the debt level is relatively low. However, a rise in debt reaching the “threshold” level diminishes the chances of an increase in investments. The results above indicate: the current economic downturn being experienced will not be resolved by further leverage.

Investment, Debt Threshold, Financial Stress

Peng, F. , Cebula, R. , Foley, M. , Hu, X. and Zhang, Z. (2018) Debt and Investment: A Firm Level Evidence. Journal of Mathematical Finance, 8, 119-126. doi: 10.4236/jmf.2018.81010.