Globally, corporate cash holdings have risen since the 1980s. In South Africa, some commentators have accused corporations of engaging in an 'investment strike', while others see corporate liquidity as a precaution against systemic uncertainty. We use the unique South African Revenue...

This paper contributes to the supply chain finance literature with an agent-based Monte Carlo simulation model focusing on the bank’s point of view. Our theoretical model assesses how a bank should screen a supply chain (SC) member and whether that requires different considerations and...

In this paper we introduce two measures, the Systemic Liquidity Buffer (SLB) and the Systemic Liquidity Shortfall (SLS) to assess liquidity in the banking system. The SLB takes an aggregated perspective on liquidity risks in the banking system. In contrast, the SLS focusses on the problematic...

This study investigates determinants of Egyptian SMEs financial failure predictability based on a sample of 32 failure SMEs and 28 non-failure SMEs for the period 2013 and 2019. The determinants of SMEs financial failure are categorized into four groups; Working Capital, Asset Structure,...

This paper investigates whether gender diversity in the boardroom is associated with corporate cash holdings and whether investor protection moderates the effect of corporate board gender diversity on corporate cash holdings. Using 20,750 firm-year observations from 33 countries, our analyses...

The paper aims to investigate the effects of financial distress risk (FDR) and related party transactions (RPT) on financial reporting quality (FRQ) in an emerging market called Iran. In this study, the ordinary least squares regression (OLS) method is employed to test the hypotheses; moreover,...

This study analyzes the influence of operating capital on a firm’s profitability in the manufacturing sector of China. The study investigates that operating capital develops a non-linear relationship with firm profitability by using the ordinary least square (OLS), fixed effect (FE), and...

In response to relatively little evidence on the determinants of the financial distress in cooperative financial institutions (e.g., Credit Unions), this paper proposes a distress indicator of Merton Distance to default (Merton DD), which was constructed with a z-score, possessed improved...

This paper considers the efficiency of financial intermediation and the propagation of business cycle shocks in a model of long-term relationships between entrepreneurs and lenders lenders may be constrained in their short-run access to liquidity. When liquidity is low, relationships are subject...

Aim: A global rise in inflation has sparked a renewed interest in the matter of cash holding decisions in firms. Increasing inflation makes for different cash holding practices, but the effect of cash holdings on firm performance remains unclear. This study aims to determine what the effect of...

We examine the effects of CEO neuroticism on corporate policies for cash holdings. We hand-collect the tweets by CEOs at S&P 1500 companies to measure their neuroticism. We find that firms with relatively neurotic CEOs hold more cash than other CEOs. Using two crises as shocks to corporate...

Working capital is all about management of short-term assets and liabilities of an organization in order to enhance profitability and avoid insolvency situations. This paper appraises the linkage between working capital management, liquidity and financial performance in Kenya with a keen...

We introduce a new class of semiparametric dynamic autoregressive models for the Amihud illiquidity measure, which captures both the long-run trend in the illiquidity series with a nonparametric component and the short-run dynamics with an autoregressive component. We develop a GMM estimator...

Using geographic variation in real estate market shocks following the financial crisis to proxy for local economic vulnerability, we find that firms whose headquarters are in states with vulnerable real estate markets are associated with more cash holdings. We document consistent results using a...

We empirically examine the effects of economic policy uncertainty (EPU) of which measurement methodology Baker, Bloom & Davis (2019) propose on the investment and cash holding behaviors of Japanese firms. We also examine spillover effects of EPU of the United States on them. We find that...

We provide evidence that credit lines offer liquidity insurance to borrowers. Borrowers are able to extensively use their credit lines in recessions and ahead of credit line cuts. In fact drawdowns and changes in drawdowns predict internal credit rating downgrades and credit line cuts,...

In 2012, China implemented a green credit policy (GCP) that restricts bank credits to heavily polluting firms. This paper examines how the GCP affects the cash holdings of Chinese listed firms. Using a difference-in-differences research design, we find that GCP-affected firms increase their cash...

By tracking the cumulative inventory position of all passive liquidity providers in the US equity market and matching each position with its offsetting trade, we construct a measure of profits to liquidity provision (realized profitability) and assess how profitability varies with the average...

This study investigates the impact of the global financial crisis on the determinants of corporate cash holdings and adjustments towards target cash levels using a sample of Eastern European firms. Employing panel fixed effects and GMM estimations, the results reveal that firm-level determinants...

Purpose: The purpose of this study is to explore the difference between the determinants of cash holdings of shariah-compliant and non-shariah-compliant firms, for non-financial corporations in the Gulf Cooperation Council (GCC). Methodology: The data includes all non-financial firms listed in...

We examine the effect of rivals’ cash holdings on corporate innovation. To establish causality, we employ an instrumental variable approach and use the American Jobs Creation Act as an exogenous shock to rivals’ cash holdings. We find that when rivals hoard more cash, firms apply for...

This paper is a piece for contributing to the sustainable European stake in order to interlock financial systems with the objectives of the 2030 Agenda (the UN’s SDGs). It is intended to be used as a platform for discussion between risk management practitioners in the financial industry and...

Language is an important dimension of culture. Dialect diversity is a prevalent phenomenon in many countries. This paper examines whether dialect sharing between the chairperson and the CEO (CCDS) affects corporate cash holdings and, if yes, through which channels. We obtain robust evidence that...

Most financial advisors recommend storing three to six months of expenses in liquid assets in case of an emergency. Yet we estimate that more than half of U.S. families do not have at least three months of their non-discretionary expenses in liquid savings. We find that financial literacy is...

This paper uses an asymmetric information framework to understand the causes of the recent financial crisis in Korea. It shows that the Korean data is consistent with this explanation of the crisis. It then draws on this analysis to discuss several lessons that can help guide Korean policymakers...

Canonical theories of trading assume that financial asset payoffs are linear in their fundamentals.This study argues that the nonlinearity of equity and corporate bond payoffs (by virtue of their issuer’s solvency) has novel, important effects on their price formation. We show that informed...

China’s bond market has been ranked third globally; however, China’s corporate bonds are significantly less liquid than its stocks. Liquidity risk is an important component in China’s corporate bond spreads. In this paper, we propose a stochastic liquidity discount factor model to evaluate...

Socially responsible investing (SRI) continues to gain momentum in the financial market space for various reasons, starting with the looming effect of climate change and the drive toward a net-zero economy. Existing SRI approaches have included environmental, social, and governance (ESG)...

This study predicts the cash holdings policy of Turkish firms, given the 20 selected features with machine learning algorithm methods. 211 listed firms in the Borsa Istanbul are analyzed over the period between 2006 and 2019. Multiple linear regression (MLR), k-nearest neighbors (KNN), support...

This study investigates the impact of COVID-19 exposure on corporate cash holdings using firm data across sixteen developing and developed economies. The results show that firms reserve more cash when their exposure to COVID-19 increases. We also find a cash burn effect during the COVID-19...

We examine how employees’ online ratings on Glassdoor affect a firm’s cash holding adjustment speed. We find that firms with higher average online ratings increase the speed of adjusting their cash holding to the optimal level faster. The results are pronounced in high human...

The research aimed to identify changes in the level of liquidity and profitability of meat industry enterprises and determine the relationship between liquidity and profitability in this industry. The authors made a hypothesis that there is a positive relationship between the liquidity and...

The study seeks to investigate the firm specific and country specific factors affecting the corporate cash holdings of non-financial firms in Europe and Asia over the period 2010-2019. One step and two step system GMM panel estimators are applied in dynamic panel model for hypothesis testing. We...