EconPapers    
Economics at your fingertips  
 

The impact of macroeconomic uncertainty on non‐financial firms' demand for liquidity

Christopher Baum, Mustafa Caglayan (), Neslihan Ozkan and Oleksandr Talavera ()

Review of Financial Economics, 2006, vol. 15, issue 4, 289-304

Abstract: This paper empirically investigates whether changes in macroeconomic volatility affect the efficient allocation of non‐financial firms' liquid assets. We argue that higher uncertainty will hamper managers' ability to accurately predict firm‐specific information and induce them to implement similar cash management policies. Contrarily, when the macroeconomic environment becomes more tranquil, each manager will have the latitude to behave more idiosyncratically as she can adjust liquid assets based on the specific requirements of the firm, bringing about a more efficient allocation of liquid assets. Our empirical analysis provides support for these predictions.

Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://doi.org/10.1016/j.rfe.2006.01.002

Related works:
Journal Article: The impact of macroeconomic uncertainty on non-financial firms' demand for liquidity (2006) Downloads
Working Paper: The Impact of Macroeconomic Uncertainty on Non-Financial Firms' Demand for Liquidity (2005) Downloads
Working Paper: The Impact of Macroeconomic Uncertainty onNon-Financial Firms’ Demandf or Liquidity (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:revfec:v:15:y:2006:i:4:p:289-304

Access Statistics for this article

More articles in Review of Financial Economics from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2025-03-22
Handle: RePEc:wly:revfec:v:15:y:2006:i:4:p:289-304