[en] This paper explores the connection between rising intangible capital and the secular upward trend in U.S. corporate cash holdings. We calibrate a dynamic model with two productive assets—tangible and intangible capital—in which only tangible capital can serve as collateral. We highlight the following points: (i) a shift toward intangible capital shrinks firms' debt capacity and leads them to hold more cash, (ii) the effect accounts for three-quarters of the observed trend in average cash ratios, and (iii) it also accounts for the upward trend of cash ratios in the cross-section of small and large firms and in the aggregate.
Disciplines :
Finance
Author, co-author :
Falato, Antonio; Federal Reserve Board of Governors, United States
Kadyrzhanova, Dalida; Federal Reserve Board of Governors, United States
Sim, Jae; Federal Reserve Board of Governors, United States
STERI, Roberto ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Finance (DF)
External co-authors :
yes
Language :
English
Title :
Rising Intangible Capital, Shrinking Debt Capacity, and the U.S. Corporate Savings Glut
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