Tuesday, November 23, 2010

SSRN-Internal Sources of Finance and the Great Recession by Michelle Barnes, N. Pancost

SSRN-Internal Sources of Finance and the Great Recession by Michelle Barnes, N. Pancost:
"The rising stockpile of cash as a share of total assets at US firms has intrigued economists...We...show that the rise in cash holdings has coincided with an increased willingness to save internally-generated cash. We show that although investment is normally sensitive to externally-generated cash, the increased sensitivity of investment to cash during the Great Recession is driven by cash from internal sources. Smaller firms were also more affected by the recent downturn than larger firms."

Nothing surprising but it does fit the models that having cash on hand for a "rainy day" is a good thing. Also that the cash largely came from internal sources.
Enhanced by Zemanta

No comments: