Investigating the Nonlinear Effect of Economic Policy Uncertainty and Bank Loans on Corporate Inefficient Investment
Keywords:
Inefficient Investment, Economic Policy Uncertainty, Bank LoansAbstract
This study aims to examine the nonlinear effects of economic policy uncertainty and bank loans on inefficient investment in firms listed on the Tehran Stock Exchange. This research is an applied, descriptive–analytical, and ex-post facto study. The statistical population includes all firms listed on the Tehran Stock Exchange, from which 143 firms were selected using a systematic elimination sampling method over the period 2014–2023. Data were collected from financial statements and official economic sources. Hypotheses were tested using panel data regression models and the Generalized Method of Moments (GMM) in EViews10 software. Diagnostic tests, including stationarity, autocorrelation, and multicollinearity tests, were conducted to ensure model validity and robustness. The results indicate that economic policy uncertainty has a significant nonlinear effect on inefficient investment, following an inverted U-shaped (R-shaped) relationship, where inefficiency initially increases and then decreases over time. The ratio of long-term loans to assets shows no significant nonlinear effect. However, the ratio of short-term loans to assets exhibits a significant nonlinear U-shaped relationship, such that it initially reduces inefficient investment but increases it at higher levels. The findings highlight that economic policy uncertainty and debt structure—particularly short-term financing—play a critical role in shaping nonlinear patterns of inefficient investment. Effective management of uncertainty and optimal financial structuring can enhance investment efficiency and reduce resource misallocation.
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Copyright (c) 2025 Abbas Alimardani Karafsi (Author); Arezoo Khosravani (Corresponding author); Reza Ziyari, Arefeh Mohaghegh (Author)
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
