Financial Constraints and Inventory Investment of Listed Non-Financial Firms in Nigeria

Firms can experience financial constraints in periods when the monetary authority embarks on contractionary monetary policy. Firms with good internal sources of funds are usually not affected during this time, but those with poor internal sources of funds and coupled with high asymmetric information with lenders are expected to be financially constrained. The response of firms during this period has been of much concern to researchers. This study examined a sample of 76 quoted firms in the Nigerian Stock Exchange (NSE) to verify this hypothesis, using a system GMM method of econometrics, our result shows that financial constraints does not have any significant impact on inventory investment. The implication of this study is that, asymmetric information between borrowers and lenders may have little or no effect in the credit market in Nigeria