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

JaeBin Ahn, Euihyun Bae and Jing Zhou

No 2024/245, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: Corporate cash; Monetary policy transmission; Interest income; Interest expense; Net interest payment; cash holding; tightening JaeBin Ahn; Monetary tightening; Interest payments; Income; Employment; Capital spending; North America; Global (search for similar items in EconPapers)
Pages: 14
Date: 2024-11-22
New Economics Papers: this item is included in nep-cba, nep-fdg and nep-mon
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