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Excess Capital and Liquidity Management

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  • Jan Toporowski

Abstract

These notes present a new approach to corporate finance, one in which financing is not determined by prospective income streams but by financing opportunities, liquidity considerations, and prospective capital gains. This approach substantially modifies the traditional view of high interest rates as a discouragement to speculation; the Keynesian and Post-Keynesian theory of liquidity preference as the opportunity cost of investment; and the notion of the liquidity premium as a factor in determining the rate of interest on longer-term maturities.

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  • Jan Toporowski, 2008. "Excess Capital and Liquidity Management," Economics Working Paper Archive wp_549, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_549
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    Cited by:

    1. Jan Toporowski, 2020. "Credit, Debt and Distribution in the Monetary Theories of Augusto Graziani And Michal Kalecki," Annals of the Fondazione Luigi Einaudi. An Interdisciplinary Journal of Economics, History and Political Science, Fondazione Luigi Einaudi, Torino (Italy), vol. 54(2), pages 311-326, December.
    2. Eugenio Caverzasi, 2012. "From the Financial Instability Hypothesis to the theory of Capital Market Inflation: a structural interpretation of the sub-prime crisis," DEM Working Papers Series 018, University of Pavia, Department of Economics and Management.
    3. Riccardo Bellofiore, 2014. "The Socialization of Investment, from Keynes to Minsky and Beyond," Economics Working Paper Archive wp_822, Levy Economics Institute.

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