To bank or not to bank : the determination of cash holdings and lines of credit
Author
Source
Economic Research Forum : Working Paper Series
Issue
Vol. 2017, Issue 1075-1171 (31 Dec. 2017), pp.1-21, 21 p.
Publisher
Economic Research Forum for the Arab Countries Iran and Turkey
Publication Date
2017-12-31
Country of Publication
Egypt
No. of Pages
21
Main Subjects
Financial and Accounting Sciences
Topics
Abstract EN
This paper investigates two liquidity choices of listed Jordanian firms: internal represented by cash holdings and external represented by lines of credit.
We document a significant substitution effect of lines of credit on cash holdings and show that this effect strengthens with banking relationships.
In addition, we show that lines of credit are not viable liquidity substitute of cash for all firms.
Firms with characteristics linked to high costs of external financing are significantly less likely to have access to lines of credit.
Also, Ownership of the largest ownercontroller exerts a significant negative impact on the probability of obtaining a line of credit.
Finally, using a simultaneous equation framework to estimate the joint determination of cash holdings and lines of credit we find a significant impact of ownership of the largest ownercontroller on cash holdings.
This finding suggests that firms with large owner-controller pursue a liquidity policy of high cash holdings and no lines of credit.
American Psychological Association (APA)
Tayyim, Ghadah. 2017. To bank or not to bank : the determination of cash holdings and lines of credit. Economic Research Forum : Working Paper Series،Vol. 2017, no. 1075-1171, pp.1-21.
https://search.emarefa.net/detail/BIM-812637
Modern Language Association (MLA)
Tayyim, Ghadah. To bank or not to bank : the determination of cash holdings and lines of credit. Economic Research Forum : Working Paper Series No. 1075-1171 (Dec. 2017), pp.1-21.
https://search.emarefa.net/detail/BIM-812637
American Medical Association (AMA)
Tayyim, Ghadah. To bank or not to bank : the determination of cash holdings and lines of credit. Economic Research Forum : Working Paper Series. 2017. Vol. 2017, no. 1075-1171, pp.1-21.
https://search.emarefa.net/detail/BIM-812637
Data Type
Journal Articles
Language
English
Notes
Includes appendices : p. 18-21
Record ID
BIM-812637