Five Facts About the Money Holdings of Individuals and Firms
53 Pages Posted: 28 Sep 2022
Date Written: September 19, 2022
Using administrative panels from Norway and the Netherlands and the US Survey of Consumer Finances, we document five facts about the cash share -- the ratio of money holdings to financial wealth -- held by individuals and firms. (i) Deposit rates and the aggregate cash shares of individuals and firms have decreased substantially since the 1990's. (ii) The decline in individuals' aggregate cash share is driven by the wealthiest 10%. (iii) Deposit rates predict the wealthy's cash share. (iv) Interest income no longer represents a significant proportion of income for wealthy individuals. (v) Firms exhibit similar moneyholding dynamics as individuals.
Keywords: Money demand, household finance, corporate cash holdings, portfolio choice, low interest rates.
JEL Classification: E41, G11, G32, G51.
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