Cash Holdings and the Financialisation of Latin American Nonfinancial Corporations

27 Pages Posted: 6 Mar 2020

See all articles by Joel Rabinovich

Joel Rabinovich

Leeds University Business School (LUBS) - Division of Economics

Rodrigo Perez Artica

National University of the South - Instituto de Investigaciones Económicas y Sociales del Sur (IIESS)

Date Written: February 10, 2020

Abstract

The growth in cash holdings by non-financial corporations in emerging economies in general and Latin American in particular has received less attention compared to their peers from advanced economies. Taking into account that cash holdings contain not only cash but also short-term, interest-bearing assets, we test whether financial profitability measured by the weight of financial income over total revenues was one motive behind the increase in this type of financial asset as it is claimed in analyses of the financialisation of the firm. We use a panel of nonfinancial firms from Argentina, Brazil, Chile, Colombia, Mexico and Peru to test this hypothesis and find supporting evidence for the Brazilian case only.

Keywords: cash holdings, financialisation of the firm, Latin America

JEL Classification: D22, G30, G32, O16

Suggested Citation

Rabinovich, Joel and Artica, Rodrigo Perez, Cash Holdings and the Financialisation of Latin American Nonfinancial Corporations (February 10, 2020). Available at SSRN: https://ssrn.com/abstract=3535445 or http://dx.doi.org/10.2139/ssrn.3535445

Joel Rabinovich (Contact Author)

Leeds University Business School (LUBS) - Division of Economics ( email )

Leeds LS2 9JT
United Kingdom

Rodrigo Perez Artica

National University of the South - Instituto de Investigaciones Económicas y Sociales del Sur (IIESS) ( email )

12 de Octubre y San Juan
7th. floor
Bahía Blanca, 8000
Argentina

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