The Role of Corporate Cash Holdings in the Transmission of Monetary Policy Tightening

Volume/Issue: Volume 2024 Issue 245

Publication date: November 2024

ISBN: 9798400296321

$20.00

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Banks and Banking , Exports and Imports , Labor , Economics- Macroeconomics , Money and Monetary Policy , Public Finance , Corporate sector , Haver Analytics , Debt service , Andean Community , Global , COVID-19 , Capital spending , Financial statements , Employment , Central bank policy rate , Income , Interest payments , Labor markets , Monetary tightening , Business enterprises , Asia and Pacific , North America , Corporate cash , Monetary policy transmission , Interest income , Interest expense , Net interest payment

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Summary

The U.S. economy has been exceeding expectations amid one of the most aggressive monetary policy tightening cycles. This paper provides firm-level evidence showing that abundant cash holdings enable firms to benefit from higher interest rates, thereby reducing net interest payments and mitigate the adverse impact from interest rate hikes to firms' investment and employment.