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
Date Written: December 21, 2012
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: Suggested Citation