Puzzles in Non-Financial Corporate Sector Savings across the G20

This Economic Brief provides a contribution to the better understanding of excess corporate savings identified as one of the factors underlying global imbalances by G20 Finance Ministers and Central Bank Governors in their June 2019 meeting Communiqué. This Brief confirms that non-financial corporations’ (NFCs) savings play an important role in the determination of current account balances. It presents some stylised facts on saving and investment dynamics, suggesting that gross saving, rather than investment, have dominated recent dynamics in non-financial corporate sector’s net lending. It also looks at the macroeconomic factors that have been identified by the economic literature as the main drivers of non-financial corporate gross saving. It then complements this analysis with an assessment of corporate firm behaviour, which focuses on how firms allocate their savings in excess of investment across different types of assets, and discusses the tight relationship between corporate savings and cash holdings. The last two sections of the Brief look in more detail at the cases of China, the US and Germany, concluding with some policy recommendations, encompassing both national and international initiatives.