The Demand for Liquid Assets: A Firm Level Analysis

Economies of scale and the demand for money

“…Although this deletion of variables appears to be a substantial departure from the theoretical model, these omissions make our empirical model closely correspond to the majority of previous studies of firm money demand. Exclusion of an interest rate variable has a long history among studies of the firm demand for money (e.g., Meltzer 1963;DeAlessi 1966;Falls and Natke 1988;Vogel and Maddala 1967;Whalen 1965). Maddala and Vogel (1965) and Vogel and Maddala (1967) suggest that the omission of a firmspecific measure, such as the interest rate, could bias the estimated coefficients, in particular the sales elasticity of demand.…”

“…Liu et al (2008) provide evidence of strong economies of scale among large firms in Taiwan. Economies of scale found by Falls and Natke (1988) in Brazil may have been driven by a sample which included a wide range of firm sizes and suggests that further study of the behavior of small businesses could contribute useful insights to the firm economies of scale literature.…”

The firm demand for liquid assets in an inflationary environment

“…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.…”

“…It is common in empirical studies to control for industrial in¯uences as well as to conclude that industrial a liation alters liquid asset demand (e.g. Meltzer, 1963;Whalen, 1965;Vogel and Maddala, 1967;Shapiro, 1969;Falls and Natke, 1988).…”

Bank lending to small business in India: Analyzing productivity and efficiency

“…They use a multi equation framework and find the coefficient of real money balance statistically significant. Hassan and Mahmud (1989) use a translog cost function with the following independent variables, capital, skilled labor, unskilled labor, and real balances (measured by cash and marketable securities).They estimate the following elasticities (i) own price , (ii) cross price , and (iii) substitution; all the elasticities are statistically significant Falls and Natke (1988). delineate the demand approach to analyze scale efficiency; it emphasizes the firm's transaction demand for liquid assets (money).…”