Abstract
Recently, Japanese firms resumed accumulation of cash to the highest cash-holding levels among developed economies. We investigate the cash-saving behavior of these firms over the period 2002–2011, focusing on the firm–bank relationship. We find that the determinants of cash-saving policy are substantially different between bank-dependent firms and firms with access to the bond markets. We document that firm size and research and development intensity significantly determine the cash balances and cash-flow sensitivities of cash for firms that have access to the bond markets; however, this is not the case for bank-dependent firms. Furthermore, the effects of these variables become larger after the 2008 financial crisis only for firms with access to the bond markets. These results suggest that bank-dependent firms do not determine their cash-saving policies based on precautionary demands for cash.
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