Cash flow instability and the demand for liquid assets by firms in Brazilian Manufacturing

Falls, Gregory A.; Natke, Paul A.

doi:10.1016/s1062-9769(96)90041-1

Cited by 2 publications

(3 citation statements)

References 27 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This contrasts with the results of the entire sample (Table 1) where, in general, 432 P. A. Natke 6 The following selected studies of Brazilian industries are su cient to justify that behavioural diOE erences based on ownership did exist during the time period of this study: Connor and Mueller (1982), Falls and Natke (1988), Falls and Natke (1996), Lall and Streeten (1977), Natke (1986), Newfarmer and Marsh (1981), Newfarmer and Mueller (1975) and United Nations (1985). 7 The t-statistics for these tests are 1.48, 1.47, 1.39 and 1.52 for Equations 1, 3, 5 and 7 respectively in Table 3.…”

Section: E M P I R I C a L R Es U L T Smentioning

confidence: 67%

“…real capital or inventories). Cardoso (1991), Falls and Natke (1996) and Silveira (1973) have suggested that this portfolio adjustment process occurred in Brazil. Not only were real rates of return on short-term securities falling in Brazilian ® nancial markets in the mid-1970s but negative real returns were common.…”

Section: I I I N F L a T I O N A N D Li Q U I D A S S E T H O L Dmentioning

confidence: 99%

“…an accelerating rate of in¯ation). Falls and Natke (1996) concluded that multinationals and Brazilian ® rms react diOE erently to exchange rate instability, extent of foreign market involvement, and variability in Brazil's in¯ation rate. These diOE erences would only reveal themselves and create temporal instability when all ® rms are treated alike.…”

Section: E M P I R I C a L R Es U L T Smentioning

confidence: 99%

See 2 more Smart Citations

The firm demand for liquid assets in an inflationary environment

Natke¹

2001

Applied Economics

Self Cite

View full text Add to dashboard Cite

Measures of inflation and the price level are added to the standard model of liquid asset demand and estimated with cross-section data on Brazilian manufacturing firms over a four-year period characterized by substantial inflation (annual rates of 19, 23, 34 and 35%). Results indicate that economies of scale exist in a model that is stable over time. Interest rates have a strong and elastic impact on liquid asset demand when inflation is explicitly controlled for although this result is not consistent across all subsets of data used. The usual assumption of a unitary price level elasticity of liquid asset demand is rejected and firms appear to conserve on liquid asset holdings as the rate of inflation increases suggesting more careful management of payments flows. Some of these findings contradict those of Ungar and Zilberfarb (1980). There are also some difference in behaviour across ownership groups: Brazilian firms do not exhibit economies of scale while multinationals do; and Brazilian firms adjust actual to desired balances faster than multinational firms.

show abstract