The effect of firm cash holdings on monetary policy

Adão, Bernardino; Silva, André C.

doi:10.1016/j.euroecorev.2020.103508

Cited by 8 publications

(1 citation statement)

References 81 publications

(72 reference statements)

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“…On earth, evidence in Nigeria also substantiates these claims. In Europe, Adão and Silva (2020) attributed monetary policy and interest rate effectiveness channels to recurrent changes and firm cash holdings. In establishing FinTech's cause-effect nexus on cash holding in Nigeria, the demand function model frontiers are expended to incorporate the distinct role of FinTech on cash holding.…”

Section: Money Demand Determinantsmentioning

confidence: 99%

Effect of FinTech on cash holding: Quarterly evidence from Nigeria

Samuel

Prince

Ndubuaku

et al. 2023

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The operational activities of FinTech (Financial technology) have restyled the operational functionalities of the classical financial system in terms of cash holding. The purpose of this study is to scrutinize FinTech’s effect on cash holdings in Nigeria. Using quarterly data collated from the Central Bank of Nigeria from 2009 Q1-2020 Q4. The cointegrating nexus was estimated using the autoregressive distributed lag/bounds test model (ARDL) and the error correction model (ECM) approach. The Phillips-Perron unit root test was adopted to determine the stationarity properties of the series and their order of integration. Empirical results show the existence of a positive long run nexus between FinTech indicators of mobile banking (MOB), point of sales (POSs), Internet banking (INB), automated teller machine (ATM), and cash holding within the quarterly period under consideration. The ECM results of the short-run divergent factors of economic and financial vagueness, poverty, and literacy, among others, structural and institutional factors influencing the dogged cash transactions in Nigeria, converge back to equilibrium at 90% for ATM, 58% for POS, MOB at 67%, and WEB at 64%, respectively. This study expands its frontiers to accommodate exchange and interest rates as vital determinants of cash holding. The ARDL result offers a varied empirical perspective in contrast to the predominantly employed classical linear regression. Given the statistical limitations associated with findings derived from a singular model, it is imperative for regulators to possess a comprehensive comprehension of the operational mechanisms of Financial Technology (FinTech). This understanding would enable them to formulate appropriate policies that foster the adoption and utilization of FinTech platforms.

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Section: Money Demand Determinantsmentioning

confidence: 99%

Effect of FinTech on cash holding: Quarterly evidence from Nigeria

Samuel

Prince

Ndubuaku

et al. 2023

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Government financing, inflation, and the financial sector

Adão

Silva

2020

Econ Theory

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We calculate the effects of an increase in government spending financed with labor income taxes or inflation. We consider government spending in the form of government consumption or transfers. We use a model in which agents increase the use of financial services to avoid losses from inflation, as empirically the financial sector increases with inflation. The financial sector size is constant in standard cash-in-advance models, which implies optimal positive inflation. We reverse this result when we take into account the increase in the financial sector. In our framework, it is optimal to use taxes to finance the government. This result is robust to alternative specifications and definitions of seigniorage and government spending.

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Entrepreneurial finance and monetary policy

Jackson

Madison

2022

European Economic Review

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The effect of firm cash holdings on monetary policy

Cited by 8 publications

References 81 publications

Effect of FinTech on cash holding: Quarterly evidence from Nigeria

Effect of FinTech on cash holding: Quarterly evidence from Nigeria

Government financing, inflation, and the financial sector

Entrepreneurial finance and monetary policy

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