The impact of the global financial crisis on corporate cash holdings: Evidence from Eastern European countries

Batuman B., Yildiz Y., KARAN M. B.

BORSA ISTANBUL REVIEW, vol.22, no.4, pp.678-687, 2022 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 22 Issue: 4
  • Publication Date: 2022
  • Doi Number: 10.1016/j.bir.2021.10.002
  • Journal Name: BORSA ISTANBUL REVIEW
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, EconLit, Directory of Open Access Journals
  • Page Numbers: pp.678-687
  • Keywords: Cash holdings, Global financial crisis, Adjustment speed, Eastern Europe, INTERNATIONAL EVIDENCE, DETERMINANTS, FIRMS, GOVERNANCE, LIQUIDITY, FLOW
  • Hacettepe University Affiliated: Yes

Abstract

This study investigates the impact of the global financial crisis on the determinants of corporate cash holdings and adjustments towards target cash levels using a sample of Eastern European firms. Employing panel fixed effects and GMM estimations, the results reveal that firm-level determinants of cash holdings significantly differ for pre-and post-crisis periods. Moreover, we find significantly lower adjustment speed to attain the optimal cash level in the post-crisis period. Our results are robust to correction for endogeneity. These results hold important im-plications for Eastern European firms, which are significantly afflicted by the global financial crisis in terms of liquidity shortage and limited financial flexibility. Copyright (C) 2021, Borsa _Istanbul Anonim S , irketi. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).