Optimal Enterprise Cash Management Under Uncertainty

Xiao-yun Wei () and Li-yan Han
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Xiao-yun Wei: School of Economics and Management, Beihang University
Li-yan Han: School of Economics and Management, Beihang University

Chapter Chapter 87 in The 19th International Conference on Industrial Engineering and Engineering Management, 2013, pp 825-832 from Springer

Abstract: Abstract We present a dynamic model for enterprise cash management under uncertainty. The numerical method was used to obtain optimal level of cash holding. The results show that higher yield volatility of financial assets, liquidation cost of financial assets and coefficient of risk aversion will raise the demand for cash. It also shows that the optimal choice of inter-temporal model is different from that of single-period model. The former makes the manager choose to hold more cash. The reason is that long-horizon managers have an intrinsically larger need for cash to quell possible transaction and precautionary demand.

Keywords: Cash management; Financial assets; Uncertainty (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-642-38391-5_87

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DOI: 10.1007/978-3-642-38391-5_87

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