Essays on corporate cash holdings

Abstract

Corporate cash holdings continue to be one of the puzzles in corporate finance which have interested both academicians and policy makers. While much academic discussion on it has taken place in the context of advanced economies like USA, there has been but limited discussion on the same for emerging markets. Post the financial crisis of 2008-09, difference in growth rates between developing and advanced economies have widened, with the former growing at a faster rate than the latter. Based on Reports of International Monetary Fund and World Economic Outlook Database, we find that, as of April 2018, the Gross Domestic Product based on Purchasing Power Parity (PPP) share of world total of Emerging Market and Developing Economies is 59.25 per cent as opposed to 40.75 per cent of Advanced Economies. On comparing the Gross Domestic Product based on Purchasing Power Parity (PPP) share of world total of Major Advanced Economies (G7) with that of countries belonging to Emerging and Developing Asia we find that the share of the latter is ahead of the former by 3.12 percent (as of 2018), and is projected to go up to 10.67 per cent in 2023. While Advanced Economies are taking a back seat for global growth, Emerging Markets and Developing Economies are showing a lot of potential for business.