Abstract:
The aim of this master thesis is to find out what effect financial crises have on investment as well as
to explore cross-country differences arising from uncertainty avoidance and a country’s financial
system. The country sample consists of all 28 countries that are member of the European Union,
including the United Kingdom. The time period in which data for this research is collected is between
1970-2016. Using a fixed effects estimation method, this research finds that financial crises have a
significantly negative effect on investment. This effect is more negative for countries that score high
on the uncertainty avoidance index and less negative for countries that score low on the uncertainty
avoidance index. These findings remain robust when analysing the results with economic- and
institutional control variables. No significant effect of a country’s financial system has been found.
