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U.K. Companies' Short-Term Financial Decisions: Evidence from Company Accounts Data


  • Chowdhury, Gopa
  • Green, Christopher
  • Miles, David


Short-term financial decisions of companies are modeled with data from the published accounts of a sample of U.K. companies. The total short-term financing requirement is modeled as a buffer, absorbing deficits and surpluses elsewhere in the company's accounts. The focus is on the allocation of this total across four financial instruments: short-term bank borrowing, liquid assets, trade credit given and received. The major determinants of the allocation are found to be the company's mainstream operations (investment, profits, etc), its balance-sheet position, and economy-wide factors (interest rates, tax rates, statutory controls). There is evidence of systematic differences in behavior across companies related to size and profitability. Copyright 1994 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Chowdhury, Gopa & Green, Christopher & Miles, David, 1994. "U.K. Companies' Short-Term Financial Decisions: Evidence from Company Accounts Data," The Manchester School of Economic & Social Studies, University of Manchester, vol. 62(4), pages 395-411, December.
  • Handle: RePEc:bla:manch2:v:62:y:1994:i:4:p:395-411

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    References listed on IDEAS

    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Mervyn A. King & Mark Robson, 1989. "Endogenous Growth and the role of History," NBER Working Papers 3151, National Bureau of Economic Research, Inc.
    3. Xavier Sala-i-Martin, 1990. "Lecture Notes on Economic Growth(II): Five Prototype Models of Endogenous Growth," NBER Working Papers 3564, National Bureau of Economic Research, Inc.
    4. Grier, Kevin B. & Tullock, Gordon, 1989. "An empirical analysis of cross-national economic growth, 1951-1980," Journal of Monetary Economics, Elsevier, vol. 24(2), pages 259-276, September.
    5. Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 441-463.
    6. Stern, Nicholas, 1991. "The Determinants of Growth," Economic Journal, Royal Economic Society, vol. 101(404), pages 122-133, January.
    7. Kormendi, Roger C. & Meguire, Philip G., 1985. "Macroeconomic determinants of growth: Cross-country evidence," Journal of Monetary Economics, Elsevier, vol. 16(2), pages 141-163, September.
    8. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, January.
    9. Robert Summers & Alan Heston, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–1988," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 327-368.
    10. Sala-I-Martin, X., 1990. "Lecture Notes On Economic Growth: Five Prototype Models Of Endogenous Growth," Papers 622, Yale - Economic Growth Center.
    11. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    Cited by:

    1. Ono, Masanori, 2001. "Determinants of Trade Credit in the Japanese Manufacturing Sector," Journal of the Japanese and International Economies, Elsevier, vol. 15(2), pages 160-177, June.
    2. Sanjiva Prasad & Christopher J. Green & Victor Murinde, 2001. "Company Financing, Capital Structure, and Ownership: A Survey, and Implications for Developing Economies," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    3. Barbara Summers & Nicholas Wilson, 2002. "An Empirical Investigation of Trade Credit Demand," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(2), pages 257-270.
    4. Goodhart, Charles, 1989. "The Conduct of Monetary Policy," Economic Journal, Royal Economic Society, vol. 99(396), pages 293-346, June.

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