ABSTRACT
All models of economic growth stress the importance of capital investment for long-run growth. Whether the emphasis is on the quantity of capital (Solow, 1956) or the quality of capital (Romer, 1994) there is consensus within the economics profession that the economy that best sustains its investment is the economy that will best prosper. Investment in capital, however, requires finance. If we can understand intrinsically the importance of investment at the macroeconomic level, then how do we explain the mechanics whereby, at the micro level, firms raise the necessary monies to finance investment?
