The Rise in Corporate Saving and Cash Holding in Advanced Economies: Aggregate and Firm Level Trends
IMF Working Papers, December 7, 2018
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- The Rise in Corporate Saving and Cash Holding in Advanced Economies: Aggregate and Firm Level Trends
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Bibliographic details
- Authors: Mai Dao, Chiara Maggi
- Published: December 7, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484385395.001
Summary
- Using cross-country national accounts and firm-level data, the paper documents a broad-based trend in rising gross saving and net lending of non-financial corporates across major industrialized countries over the last two decades.
- The trend is most pronounced in countries with persistent current account surpluses.
- 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 over the last 15 years are broad-based across countries.
Major empirical findings
- Rising gross saving and net lending of non-financial corporates observed across major industrialized countries over the last two decades.
- The rise is concentrated among large firms.
- The trend holds consistently across major industries.
- The build-up associated more with liquid financial assets (cash) than with increased fixed capital investment.
Drivers and determinants
- Concentration among large firms driven by:
- Rising profitability.
- Lower financing costs.
- Reduced tax rates.
- Growth in corporate cash holding and saving over the last 15 years mainly accounted for by:
- Growth in assets of large firms.
- R&D intensity.
- Lower effective tax rates.
Scope, data, and methods
- Data sources: cross-country national accounts and firm-level (balance-sheet) data.
- Sector focus: non-financial corporates.
- Time horizons referenced: "over the last two decades" and "over the last 15 years".
- Empirical approaches referenced in keywords: firm level analysis, first-differenced regression.
Subjects and keywords
- Subjects: 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.