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

34 Pages Posted: 22 Dec 2012 Last revised: 28 Jul 2022

Date Written: December 21, 2012

Abstract

This working paper was written by Alessandra Guariglia (University of Birmingham) and Paul Mizen (University of Nottingham).

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

Research, Hong Kong Institute for Monetary and Financial, Investment and Asset Growth of Asian Firms: Evidence for Financial Resilience in the Recent Financial Crisis (December 21, 2012). Hong Kong Institute for Monetary and Financial Research (HKIMR) Research Paper WP No. 32/2012, Available at SSRN: https://ssrn.com/abstract=2192375 or http://dx.doi.org/10.2139/ssrn.2192375

Hong Kong Institute for Monetary and Financial Research (Contact Author)

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