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On the Determinants of SMEs Cash Holding: Evidence from Spain

Pedro J. García-Teruel

University of Murcia

Pedro Martínez-Solano

University of Murcia

December 2004

This work analyses the explanatory factors of the cash holdings of a sample of 860 small and medium-sized firms from Spain during the period 1997-2001. We find that the firms pursue a target cash level to which they attempt to converge, and that this level is higher for firms with larger cash flows, for those that are more highly leveraged and for those that have more short-term debt. In contrast, the cash level falls with the use of bank debt and in the presence of substitutes for cash.

Number of Pages in PDF File: 38

Keywords: Cash, Liquidity, SMEs

JEL Classification: G31, G32

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Date posted: April 26, 2005  

Suggested Citation

García-Teruel, Pedro J. and Martínez-Solano, Pedro, On the Determinants of SMEs Cash Holding: Evidence from Spain (December 2004). Available at SSRN: https://ssrn.com/abstract=695163 or http://dx.doi.org/10.2139/ssrn.695163

Contact Information

Pedro J. García-Teruel
University of Murcia ( email )
Department of Management and Finance
Murcia, 30100
34 968367828 (Phone)
34 968367537 (Fax)
HOME PAGE: http://webs.um.es/pjteruel/miwiki/doku.php
Pedro Martínez-Solano (Contact Author)
University of Murcia ( email )
Dpt. Management and Finance
Murcia, Murcia 30100
34 868 883 747 (Phone)
34 868 887 537 (Fax)
HOME PAGE: http://webs.um.es/pmsolano
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