Differential cash constraints, financial leverage and the demand for money: Evidence from a complete panel of Taiwanese firms

@inproceedings{Liu2008DifferentialCC,
  title={Differential cash constraints, financial leverage and the demand for money: Evidence from a complete panel of Taiwanese firms},
  author={Jin-tan Liu and Meng-Wen Tsou and Ping Wang},
  year={2008}
}
This paper studies firms' demand for money by developing a differential-cash-constraint framework with firms' entire wage bills requiring cash in advance and a fraction of investment purchases being financed by credits. In addition to conventional scale and opportunity-cost factors, firms' financial status and profitability are crucial determinants for their money demand behavior. Employing a new data set consisting of a panel of Taiwanese firms over 1990-97, our econometric analysis lends… CONTINUE READING

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