Is saving vital? Evidence from the financial crisis

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TEKİN H., POLAT A. Y.

ECONOMICS AND BUSINESS LETTERS, vol.9, no.2, pp.124-134, 2020 (ESCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 9 Issue: 2
  • Publication Date: 2020
  • Doi Number: 10.17811/ebl.9.2.2020.124-134
  • Journal Name: ECONOMICS AND BUSINESS LETTERS
  • Journal Indexes: Emerging Sources Citation Index (ESCI), Scopus, Business Source Elite, Business Source Premier, EconLit, DIALNET
  • Page Numbers: pp.124-134
  • Keywords: adjustment speed, eurozone debt crisis, financial constraints, global financial crisis, market regulations, CASH HOLDINGS, ADJUSTMENT
  • Abdullah Gül University Affiliated: Yes

Abstract

We use a sample of 8,561 firm-years from the highly regulated Main Market (MAIN) and relatively unregulated Alternative Investment Market (AIM) in the United Kingdom to analyse the impact of financial restrictions on optimal cash holdings in the context of financial crises. Employing system generalised methods of moments, we find that AIM firms have a faster adjustment speed of cash as confirmed by precautionary and transaction motives over 2002-2017. However, AIM firms decrease (increase) their adjustment speed of cash more than MAIN firms during (after) the financial crises.