Journal Article

Are Firms Hoarding Cash Post-Pandemic

Abstract: Cash holdings rose to record levels following the pandemic, raising concerns that firms are “hoarding” cash beyond what is needed for economic use. To investigate this claim, we examine the determinants of cash holdings at public firms pre- and post-pandemic. We find that despite significant structural changes in the economy, firms’ cash allocation incentives are mostly unchanged. Investment opportunities and profitability best explain the distribution of cash across firms today, followed by precautionary motives.

Keywords: Cash holdings; firms; risk mitigation;

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Bulletin

Publication Date: 2024-06-25

Pages: 4