Investment and Asset Growth of Asian Firms: Evidence for Financial Resilience in the Recent Financial Crisis

HKIMR Working Paper No. 32/2012

34 Pages Posted: 22 Dec 2012

See all articles by Alessandra Guariglia

Alessandra Guariglia

University of Birmingham - Department of Economics

Paul Mizen

University of Nottingham; Bank of England; Centre for Economic Policy Research (CEPR)

Date Written: December 21, 2012

Abstract

Many recent studies have pointed out that firms with cash stocks or strong cash flow are financially resilient, enabling them to continue to invest and grow even when they experience economic shocks. In this paper we ask whether Asian firms were resilient to the recent financial crisis. Using firm level data for eight Asian countries from 2001-2009, we explore the relationship between asset growth, investment, and cash flow and find that firms use all available internal funds to channel towards asset growth even during the financial crisis. We conclude that firms in Asia were resilient to the financial crisis because they continued to use internal funds to invest and grow as they had done prior to the crisis.

Keywords: Internal Finance, Cash Flow, Investment, Growth, Financial Constraints

JEL Classification: C23, D92, E44, G32, L25, O16

Suggested Citation

Guariglia, Alessandra and Mizen, Paul, Investment and Asset Growth of Asian Firms: Evidence for Financial Resilience in the Recent Financial Crisis (December 21, 2012). HKIMR Working Paper No. 32/2012, Available at SSRN: https://ssrn.com/abstract=2192375 or http://dx.doi.org/10.2139/ssrn.2192375

Alessandra Guariglia

University of Birmingham - Department of Economics ( email )

United States

Paul Mizen (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
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+44 115 951 5479 (Phone)
+44 115 951 4159 (Fax)

Bank of England

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London, EC2R 8AH
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Centre for Economic Policy Research (CEPR)

London
United Kingdom

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