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Is saving vital? Evidence from the financial crisis

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  • Hasan Tekin
  • Ali Yavuz Polat

Abstract

We use a sample of 8,869 firm-years from the highly regulated Main Market (MAIN) and relatively unregulated Alternative Investment Market (AIM) in the United Kingdom to analyse the impact of financial restrictions on optimal cash holdings in the context of financial crises. Employing system generalised methods of moments, we find that AIM firms have a faster adjustment speed of cash as confirmed by precautionary and transaction motives over 2001-2017. However, AIM firms decrease (increase) their adjustment speed of cash more than MAIN firms during (after) the financial crises.

Suggested Citation

  • Hasan Tekin & Ali Yavuz Polat, 2020. "Is saving vital? Evidence from the financial crisis," Economics and Business Letters, Oviedo University Press, vol. 9(2), pages 124-134.
    • Handle: RePEc:ove:journl:aid:14324
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    File URL: https://reunido.uniovi.es/index.php/EBL/article/view/14324
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