Differential cash constraints, financial leverage and the demand for money: Evidence from a complete panel of Taiwanese firms

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Title:	Differential cash constraints, financial leverage and the demand for money: Evidence from a complete panel of Taiwanese firms
Authors:	Liu, Jin-tan;鄒孟文;Tsou, Meng-wen;Wang, Ping
Contributors:	淡江大學國際貿易學系暨國際企業研究所
Keywords:	Firms’ transactions use of money;Financial structure;Panel data estimation
Date:	2008-03-01
Issue Date:	2009-11-30 18:20:28 (UTC+8)
Publisher:	Elsevier
Abstract:	This paper studies firms’ demand for money by developing a differential-cash-constraint framework with firms’ entire wage bills requiring cash in advance and a fraction of investment purchases being financed by credits. In addition to conventional scale and opportunity-cost factors, firms’ financial status and profitability are crucial determinants for their money demand behavior. Employing a new data set consisting of a panel of Taiwanese firms over 1990–97, our econometric analysis lends empirical support to our theory. The estimates suggest that economies of scale in firms’ cash management are present and that lower financial leverage or higher profitability raises money demand significantly.
Relation:	Journal of Marcoeconomics 30(1), pp.523-542
DOI:	10.1016/j.jmacro.2007.01.002
Appears in Collections:	[Graduate Institute & Department of International Business] Journal Article

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