01927cas a2200253 a 4500 AALejournalIMF017308 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475563122 1018-5941 BD-DhAAL BD-DhAAL Chen, Sophia. Does Balance Sheet Strength Drive the Investment Cycle? : Evidence from Pre- and Post-Crisis Cyprus / Sophia Chen, Yinqiu Lu. Washington, D.C. : International Monetary Fund, 2016. 1 online resource (26 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Fixed investment was the most important contributing factor to the boom-bust cycle in Cyprus over the last decade. Investment boomed during a credit boom in mid-2000s, during which the corporate sector borrowed heavily. Investment collapsed after 2008 when the credit boom ended. Investment and corporate balance sheets further deteriorated during the Cypriot banking crisis over 2012-2014. Using firm-level investment and balance sheet data, we find that corporate indebtedness is negatively associated with investment both before and after the banking crisis, although the effect is weaker after the Cypriot banking crisis, possibly due to the reduced role of credit in driving post-crisis investment and growth. Our results suggest the need to repair corporate balance sheets to support sustainable invesetment. Mode of access: Internet Lu, Yinqiu. IMF Working Papers; Working Paper ; No. 2016/248 Full text available on IMF http://elibrary.imf.org/view/journals/001/2016/248/001.2016.issue-248-en.xml IMF e-Library