Liquid Assets Research Articles

Demystifying the Relationship between Corporate Cash Holdings and its Determinants in Indian Firms

There are two schools of thought regarding cash policy, where one sect finds cash policy is insignificant in today’s perfect capital market condition and the other feel corporate cash policy is the key determinant of company growth and success. Corporates constantly balance in maintaining cash reserves to cushion against future contingencies. Shortage of liquid assets may affect the operation of the firm. Cash management of any firm is bounded by precautionary, transaction, and speculative motives. Various predominant factors influence a company’s cash reserve policy. The natures of business and R&D expenditure are a few key determinants that demand a firm to maintain a certain level of cash. At the same time maintaining an optimum cash balance is becoming hypothetical under the current scenario. The Company must take an optimum cash policy so that it should not remain ideal without generating any return. This paper is to analyze the impact of cash policy and cash holding patterns of Indian firms. The paper has tried to uncover certain determinants of cash holding. The study highlights the relationship between variables such as cash ratio, leverage, and size of the firm. Panel data regression and the Random Effect model are used. The sample for the study is non-financial companies with ten years data set.

REANALYSIS OF SPIN-OFF ISLAMIC BANKS IN INDONESIA: EFFICIENT OR NOT?

The market share of Islamic banks in Indonesia is around 6,3%. Although starting 2008, BI had been a spin-off to enrich the Islamic bank market share, the efficiency did not surmount the big problem from an Islamic bank. This study aims to reanalysis efficiency policy in Indonesia's spin-off in 2011-2019. The research sample is Islamic banking in Indonesia, including BUS (Islamic commercial banks) and UUS (Sharia Business Unit) that was doing spin-off yet. This research used an analysis method of DEA (Data Envelopment Analysis) by using CRS (constant return to scale) and VRS (Variable return to scale models). The variables consisted of input and output, such as liquid assets, total financing, profit-sharing income, operating cost, personnel cost, and fixed assets. The result and findings show that BUS after the spin-off is inefficient. Moreover, several Islamic commercial banks decreased inefficiency in many periods. The spin-off does not affect efficiency, especially in the market share of Islamic banks. UUS was more efficient than BUS. One of the factors because of operational cost. However, the BUS is more inefficient than UUS in producing Islamic financial products and services. Besides that, labor costs cannot cut and always grow every time. Finally, making a load of the company to be weight thus consumer prize more expensive

Optimum resources combination and mesh earnings of deposit money banks in Nigeria

The study focused on optimum resources combination and mesh earnings of Deposit Money Banks in Nigeria. The major objective of the study was to ascertain the optimum level of resource mixed and its consequence on the mesh earnings of the studied Deposit Money Banks. The research design used in the study was ex-post facto. The study covered a period of eight years. The study used a convenient sampling procedure in selecting the sample size, using convenience and accessibility to data as criteria. A secondary source of data collection was adopted in the study. Variables of mesh earnings, firmness and operative effectiveness were used to test the research hypotheses. All the tabulated ratios interpreted and regression analysis showed that the sampled banks performed below standard with regards to the test criteria; mesh earnings, firmness and operative effectiveness. However, in all results of the tests, it was discovered that there was no significant correlation between optimum resources combination and mesh earnings, firmness and operative effectiveness of Deposit Money Banks in Nigeria. Therefore, the following recommendations were made: Deposit money banks should give consideration to the variables representing mesh earnings because they are tactical variables that are within administration and the Board’s control. Banks should adopt the mix source of bankrolling such as interior and exterior sources. The inside source should be retained earnings while the outside source should be shareholder fund. To evade liquidness drawbacks, the study recommended that banks should keep enough liquid assets so as to elude depositors’ loses.

Household Wealth and Inheritance Transfers: Evidence from the Euro Area.

The accumulation of wealth by households is an essential contributor towards macroeconomic and financial stability and resilience, while also affecting social mobility. The aim of this paper is to analyze the relationship between household wealth and the receipt of inheritances and intergenerational transfers. We use detailed micro-level data from the 2017 vintage of the Household Finance and Consumption Survey (HFCS) for households across the Euro Area in order to explore this relationship in detail, analyzing various classes of assets and liabilities, together with inflows of inheritances and gifts between 2014 and 2017, as well as any associated wealth effects. The results show that inheritance flows are positively and significantly-associated with net overall household wealth, primarily via increases in the value of liquid assets like publicly-traded shares and the value of existing self-employment business, while reducing mortgage debt, particularly outstanding loans related to the household’s main residence. We find no evidence of any wealth effects from inheritances in terms of increased consumption expenditure, leisure spending or motor vehicle ownership. These findings collectively suggest that households anticipated the bequests received, with behavior in line with predictions emanating from standard rational expectations life cycle income hypothesis models.

Mutual fund suspensions during the COVID-19 market turmoil - asset liquidity, liquidity management tools and spillover effects

We investigate the drivers and impact of suspending redemptions for European mutual funds. Using a novel data set of funds that suspended redemptions during the COVID19 market turmoil in March 2020, we find that illiquid funds invested in real estate are substantially more likely to suspend than other funds. Suspensions are also strongly correlated with funds’ cash holdings, leverage, age and the availability of ex-ante liquidity tools. We also find that suspensions result in lower inflows for the suspending funds once they re-open and for associated non-suspending funds belonging to the same asset management company, suggesting spillover effects from suspensions.

Liquidity Risk Management of Mudharabah Deposit Products At PT. BPRS Al Makmur

Abstract
 This research aims to uncover the risk management and management system carried out by PT. BPR Syariah Al-Makmur against mudharabah deposit products. This type of research is qualitative with descriptive methods. Data is collected through interviews and documentation to get an overview of the research. This study found that deposits became a superior product because deposits could take funds even if they were not due and were not subject to fines (penalties). To avoid liquidity risks due to withdrawal of funds before maturity, management develops various strategies. The liquidity risk management strategy developed in sequence is through a persuasive approach, namely by giving ababa, requesting 1 to 3 days if the funds are insufficient and providing facilities for the delivery of funds to the customer's residence. The preventive strategy of handling liquidity risk is to predict the needs of funds by carrying out daily monitoring of funds so that the stock of funds is carried out, also through the asset liquidity approach and repressive approach. Become a new model of deposit management carried out by PT. BPR Syariah Al-Makmur because no other financial institution has done anything like this. This model proved to be the largest source of funds compared to ordinary savings from 2012 to 2018. Although the number of deposits has decreased from 2017 to 2019. Even in 2019 the number of deposits is lower than ordinary savings, but this is an interesting thing to study further why this can happen.

The strategic determination of the supply of liquid assets

We study asset liquidity in a model where financial assets can be liquidated for money in over-the-counter (OTC) secondary markets, in response to random liquidity needs. Traders choose to enter the market where they expect to find the best terms, understanding that their chances to trade depend on the entry decision of other investors. We find that small differences in OTC microstructure can induce very large differences in the relative liquidity of two assets. We use our model to rationalize, qualitatively and quantitatively, the superior liquidity of U.S. Treasuries over equally safe corporate debt.

West African Economic and Monetary Union

The limited development of markets in the region represents a key risk factor for financial stability. 1 Since the previous Financial Sector Assessment Program (FSAP) in 2008, the bank deposit base has increased from 18 percent to 30 percent of gross domestic product (GDP) and the buoyancy of the government securities market has benefited from the interruption of public deficit financing by the Central Bank of West African States (BCEAO). Nevertheless, a significant portion of bank funding cannot be considered stable, due to the concentration of deposits held by large corporations. Apart from reserves held with the BCEAO, banks have little in the way of liquid assets, although the secondary market for government securities is beginning to grow for some issuers. Insufficient secondary market liquidity and the prevalence of unsecured intragroup transactions (60 percent of the total) in the interbank market exacerbate the risk and extent of potential losses for banks in the event of liquidity distress.

Liquidity risk, macroprudential regulation and bank performance: empirical evidence from Vietnamese commercial banks

This paper attempts to cover the gap in the literature on the effects of liquidity risks and macroprudential policies on the performance of domestic banks in Vietnam. The two-way fixed effects and fixed effects generalized least squares methods are employed to analyze panel data from 31 Vietnamese commercial banks from 2006 to 2020. The results show that the liquid assets to total assets ratio has a positive effect on bank performance, which is measured by net interest margin. Stricter macroprudential regulations, which are represented by the short-term funding for mid-to-long-term loans ratio, improve domestic banks’ performance when taking the increase of foreign bank presence into account.

LIQUIDITY RISK DETERMINERS OF PARTICIPATION BANKS

Bankalarda diğer ticari kuruluşlar gibi çeşitli riskler ile karşı karşıyadır. Bu risklerden biri de likidite riskidir. Bankaların varlıkları fonlayamaması ve yükümlülüklerini yerine getirememesi likidite riskini ortaya çıkarmaktadır. Geleneksel bankaların likidite riskini ölçen literatürde pek çok çalışma vardır. Fakat katılım bankalarını temel alan ve likidite riski üzerinde etkili olan faktörleri inceleyen çalışmalar oldukça sınırlıdır. Bu çalışmada beş adet katılım bankasının 2016 ve 2019 yıllarını kapsayan üçer aylık verileri kullanılarak, likidite riski üzerinde etkili olan değişkenler panel veri yöntemi kullanarak tespit edilmiştir. Yapılan analiz sonucunda likidite riski ile sermaye yeterlilik oranı arasında anlamlı ve pozitif bir ilişki tespit edilmiştir. Bu sonuç katılım bankalarının likit aktifleri arttıkça likidite riskinin azalacağını ortaya koymuştur.

The smart money is in cash? Financial literacy and liquid savings among U.S. families

Most financial advisors recommend storing three to six months of expenses in liquid assets in case of an emergency. Yet we estimate that more than half of U.S. families do not have at least three months of their non-discretionary expenses in liquid savings. We find that financial literacy is strongly predictive of having three months of liquid savings, controlling for income, income variability, and even parental resources. We also find that financial literacy predicts liquid savings across the income distribution. These results indicate that accumulation of an emergency fund is not simply a function of income. Finally, financial literacy is predictive of liquid savings even among high illiquid wealth households. This suggests that the phenomenon of “wealthy hand-to-mouth” families may reflect financial mistakes rather than portfolio optimization. Our paper highlights the importance of financial knowledge in explaining families’ preparedness to deal with unexpected expenses or disruption in their income.

Assessment of Construction Project Contractor Selection Success Factors considering Their Interconnections

Clients frequently utilize tendering to select contractors in the building business. The goal of this research is to identify, assess, and rank the critical elements in evaluating contact bids for the best-value procurement technique. There is a need to better assess the importance of factors in evaluation of tenders using their linkages between them. It differs from previous studies in considering the connections between these factors, facilitating a robust ranking and tendering evaluation. This study is unique in that it is the first to use an analytical network process (ANP) model to rank evaluation elements while taking into account their interdependencies to the best of authors' knowledge. This study included a literature review, a survey of construction industry specialists, and the application of the ANP as a ranking method for the variables. According to our research, there are 31 criteria that are critical to the success and performance of construction projects. Technical, financial, and qualification variables are divided into three groups, with the ANP model indicating that financial aspects are the most relevant. The findings of the study demonstrated that financial stability was ranked first, followed by offered price, proposed delivery date, experience with similar projects, past history, qualifications of engineers and technical staff, warranty and after sales services. The last five factors included level of innovation, use of new technologies, staff training plans, environmental considerations, and the number of liquid assets. When evaluating their interdependencies and the effects they have on other factors, the ANP ranking revealed that several elements previously thought to be inconsequential are in fact significant.

Discounting Disaster

Data scarcity has hindered studies on the impacts of climate change on land prices in the coastal regions of developing countries. Focused on the Indian Sundarbans, this paper is at the forefront of such research. Market conditions in the region feature unregulated transactions, unenforced zoning, and a lack of disaster insurance. For many residents with hereditary land ownership, stark poverty eliminates any risk buffer provided by savings or other non-essential liquid assets. Using new household surveys and environmental data, our study hypothesizes that salinization and cyclone strikes have already adversely affected land prices. We quantify such impacts using a georeferenced panel of 342 salinity monitoring stations and a spatial raster database on all cyclonic storm strikes since 1970. Our econometric results reveal highly significant negative impacts for both factors. We use the regression results to predict land prices for the most and least favourable environmental conditions recorded in our database. The results show that these climate change–related conditions account for spatial differentials greater than an order of magnitude in land prices. Such extreme risk differentials suggest high financial and fiscal stakes, underscoring the critical importance of appropriately targeted adjustment policies.

Vulnerability of low-income homeownership in the United States: An analysis based on household liquidity

ABSTRACT In the United States after the Great Recession, despite growing attention to low-income households’ homeownership vulnerability, the existing works tend to take specific angles and produce only piecemeal evidence. By placing liquid assets’ function of mediating financial hardships in the context of homeownership dynamics, I establish a synthesized conceptual framework. Based on data from the Panel Study of Income Dynamics (PSID), I put this framework to a test and find that liquid assets not only reduce the risk of homeownership exit in general but play a pivotal role in accounting for low-income borrowers’ elevated rates of exit. I discuss policy implications of the findings at the end of the paper.

Liquidity Risk of Licensed Commercial Banks in Sri Lanka

Objective: This study is intended to investigate the impact of Liquidity Risk of licensed Commercial Banks in Sri Lanka. Methodology: In this study, four key variables such as Loan to deposits Ratio, Statutory Liquid Asset Ratio, Non-Performing Loans and Liquidity Gap have been taken as the independent variables. Return on assets, Return on equity and Net Interest Margin have been taken as the dependent variable for a period of ten years from 2011 to 2020 as convenience samples. To analyze the data Pearson’s correlation analysis and multiple regression analysis were used. Findings: There was a positive relationship between Loan to Deposit and ROA.ROE and NIM and SLAR had positive relationship with ROA and negative relationship with ROE and NIM. As well as NPL and LG showed negative relationship with ROA and ROE and positive relationship with NIM. This study is useful in understanding the factors of liquidity risk and their impact on the financial performance of the banks and based on these findings can be maintained proper liquidity position.

Cash holdings and real asset liquidity

This paper examines the relationship between the ability of a firm to sell its real assets and its cash holdings behavior. A substitution effect exists between the size of cash balances and the liquidity of a firm’s real assets when access to external capital markets is limited. Among financially constrained firms, higher asset liquidity is related to lower cash holdings. Additionally for financially constrained firms, the market value of cash is lower for firms with higher asset liquidity.

Bank Credit Structure Model Based on Big Data Financial Technology Innovation

The credit business is the primary source of income for commercial banks, and the quality of credit business directly affects the operating efficiency and sustainable development of commercial banks. Constructing an evaluation model that can accurately measure the credit quality of commercial banks and then systematically analyze the distribution and evolution of credit quality is of great significance for judging the operating situation and pattern of credit assets of commercial banks in our country. This paper analyzes the credit asset quality of our country’s commercial banks from five aspects: credit asset scale, profitability, risk security, liquidity, and expansion capability, and uses computer extensive data analysis and structural equation model to analyze the 20 representative banks in our country. An empirical analysis is conducted in a commercial bank.

ДЕФІНІЦІЯ ПОНЯТЬ «ФІНАНСОВІ РЕСУРСИ» ТА «ГРОШОВІ КОШТИ»

The obtained results of theoretical research become the basis of the practical activities of enterprises and are the basis for the development of programs, projects, corporate and functional strategies of the enterprise. Therefore, a theoretical study of clarifying the essence of the concepts "financial resources" and "cash" is relevant from the point of view of optimizing management processes in financial management and establishing effective internal and external communications with the correct use of these concepts. The purpose of this scientific article is to study the essence of the definitions "financial resources" and "cash" and clarify their common and distinctive characteristics. The article discusses the concept of "resources" and their characteristics. Different approaches of scientists to the interpretation of financial resources, their features and differences are studied. The obtained results are systematized in a table highlighting the key meaning, which became: cash funds, cash resources, highly liquid assets, own and loan funds, target direction and sources of income (internal and external). The role of money in the financial and economic activity of the enterprise is determined. Cash is constantly deposited in bank accounts or cash registers in the form of proceeds from sales or income and is withdrawn when payments are made. Domestic scientists define cash as the receipt and outflow of monetary units of the enterprise and their equivalents, generated as a result of its economic activity, the movement of which is related to the factor of time, risk and liquidity. It has been proven that equating financial resources with money significantly narrows the concept of "financial resources", because they include not only available, but also potential funds. We consider it expedient to interpret "financial resources" as a set of cash and their equivalents, formed in the process of economic activity and received from the outside intended for the fulfillment of financial obligations and financing processes of the reproduction of the enterprise. It is established that cash is not the same as financial resources, but is only a part of them and is the most liquid asset of the enterprise, including cash in hand, funds on bank accounts in banks, deposits and electronic money. The given definition of financial resources of the enterprise reveals the main internal content of financial resources, according to which it becomes possible to identify the mechanism of the influence of finance on the reproductive process, which is a prospect for further scientific research.

Disenchantment as Reenchantment and the Genesis of the Pöbel in Gottfried Keller's Romeo und Julia auf dem Dorfe

This article reads Gottfried Keller's Romeo und Julia auf dem Dorfe (1856) alongside Hegel's Philosophie des Rechts in order to explore the novella's account of the origin of the dispossessed Pöbel and demonstrates that Keller's novella ultimately anticipates Marx's critique of Hegel's account of civil society. In the first part of the article, I show that the farmers, driven by an ideal of bourgeois individuality, make a bid for legally substantiated recognition of ownership that eventually results in a process of property liquidation. In the second part, I argue that the fathers' failure is mirrored in the children's failed effort to legitimate their sexual difference in a marital institution. Ultimately, their suicide pact is not contrary to the ethical code they struggle to satisfy throughout the novella but fulfills the capitalistic logic of exchange in the form of asset liquidation. I conclude by reflecting on the status of myth in Keller's realism, arguing that the artwork reveals the contradictions of the social world that it belongs to, not by constructing a vantage point beyond myth, but rather by representing its own appropriation of myth.

Financial Institution Development and Economic Growth: Dynamic Panel Evidence from the Developing Economies

This study aims to explore the impact of financial institution development (FID) on economic growth for the world and 54 developing economies from 2000 to 2019 with dynamic panel system GMM estimation. With regard to FID, this study considers 4 different indicators: access, depth, efficiency, and stability. Estimation results are as follows. First, the FID indicators (access, depth, and efficiency) have positive impact on economic growth for the world group and developing economies with stronger effect of access in developing economies. Second, the stability as another FID indicator, liquid assets, is negative only for the developing economies. It means that the higher ratio of liquid assets, the more incentive for financial institution to take on risk. These results were also maintained in the robustness check. Overall, this study suggests that developing economies should enhance their access to financial institution and put in place the measures to manage liquid assets.