On the Determinants of SME Cash Holdings: Evidence from Spain

23 Pages Posted: 15 Feb 2008

Date Written: 2006-10


This work analyses the factors that might explain the level of cash holdings in a sample of 860 small and medium-sized firms from Spain during the period 1996-2001. The empirical results show that firms have a target cash level to which they attempt to converge. The level of this target is higher for firms with more growth opportunities and larger cash flows. In contrast, the target level for cash holdings falls when the use of bank debt and the presence of substitutes for cash increase. Moreover, when the interest rates in the economy increase firms reduce their cash holding.

Suggested Citation

García-Teruel, Pedro J. and Martínez-Solano, Pedro, On the Determinants of SME Cash Holdings: Evidence from Spain (2006-10). Journal of Business Finance & Accounting, Vol. 35, Issue 1-2, pp. 127-149, January-March 2008, Available at SSRN: https://ssrn.com/abstract=1091589 or http://dx.doi.org/10.1111/j.1468-5957.2007.02022.x

Pedro J. García-Teruel (Contact Author)

University of Murcia ( email )

Department of Management and Finance
Murcia, 30100
34 868887828 (Phone)
34 868887537 (Fax)

HOME PAGE: http://webs.um.es/pjteruel/miwiki/doku.php

Pedro Martínez-Solano

University of Murcia ( email )

Dpt. Management and Finance
Murcia, Murcia 30100
34 868 883 747 (Phone)
34 868 887 537 (Fax)

HOME PAGE: http://webs.um.es/pmsolano

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