The Rise in Corporate Saving and Cash Holding in Advanced Economies: Aggregate and Firm Level Trends

December 7, 2018

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Format: Chicago

Mai Dao, and Chiara Maggi. The Rise in Corporate Saving and Cash Holding in Advanced Economies: Aggregate and Firm Level Trends, (USA: International Monetary Fund, 2018) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Using cross-country national accounts and firm-level data, we document a broad-based trend in rising gross saving and net lending of non-financial corporates across major industrialized countries over the last two decades, though most pronounced in countries with persistent current account surpluses. We find that this trend holds consistently across major industries, and is concentrated among large firms, driven by rising profitability, lower financing costs, and reduced tax rates. At the same time, higher gross corporate saving have not supported a commensurate increase in fixed capital investment, but instead led to a build-up of liquid financial assets (cash). The determinants of corporate cash holding and saving are also broad-based across countries, with the growth in assets of large firms, R&D intensity, and lower effective tax rates accounting for most of the increase over the last 15 years.

Subject: Asset and liability management, Corporate sector, Currencies, Economic sectors, Financial statements, Liquidity indicators, Liquidity management, Money, National accounts, Public financial management (PFM)

Keywords: Balance-sheet data, Cash holding, Corporate saving, Corporate sector, Currencies, Current account surplus, Financial statements, Firm level, Firms firm, First-differenced regression, Global, Gross saving, Liquidity management, Net lending, R&D, Rising profitability, WP

Publication Details

Pages:

64
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/262
Stock No:

WPIEA2018262
ISBN:

9781484385395
ISSN:

1018-5941

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