All You Need Is Cash: Corporate Cash Holdings and Investment after the Global Financial Crisis

Arbeitspapier

Cash holdings at the onset of a financial crisis are a key determinant of investment by SMEs not only during the crisis but also during the recovery period. Cash-rich SMEs could maintain their capital stock during the global financial crisis, while cash-poor rivals reduced theirs. This gave cash-rich SMEs a competitive advantage during the recovery, resulting in a persistent and growing investment gap. The amplification effect was present for SMEs with both volatile and stable cash holdings and was particularly pronounced for younger and smaller firms. Competition dynamics and borrowing constraints seem to drive this amplification effect.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 9053

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Empirical Analysis ; Business Fluctuations; Cycles ; Financial Markets and the Macroeconomy ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• Subject: SMEs ; investment ; cash holdings ; financial crisis ; misallocation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Joseph, Andreas ; Kneer, Christiane ; van Horen, Neeltje
• Event: Veröffentlichung
• (who): Center for Economic Studies and Ifo Institute (CESifo)
• (where): Munich
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/235423
• Last update: 10.03.2025, 11:42 AM CET