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Trends in Australian Corporate Financing

Author

Listed:
  • Ashley Fang

    (Reserve Bank of Australia)

  • Mitch Kosev

    (Reserve Bank of Australia)

  • David Wakeling

    (Reserve Bank of Australia)

Abstract

The aggregate funding behaviour of the Australian non-financial corporate sector has been fairly steady over the period since the global financial crisis. However, this masks the quite divergent experiences of the resources and non-resources sectors. Substantial net investment by resources companies has been funded primarily by operating cash flows, while external funding has been modest, mainly comprising borrowing to offset the effect of movements in commodity prices on internal funding. Net investment by non-resources companies has been relatively subdued, with internal funds broadly sufficient to meet this expenditure. Overall, leverage for Australian-listed companies remains relatively low, internal funding continues to cover the bulk of financing needs and companies generally appear to retain good access to external finance in its various forms.

Suggested Citation

  • Ashley Fang & Mitch Kosev & David Wakeling, 2015. "Trends in Australian Corporate Financing," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 29-38, December.
    • Handle: RePEc:rba:rbabul:dec2015-04
    as

    Download full text from publisher

    File URL: https://www.rba.gov.au/publications/bulletin/2015/dec/pdf/bu-1215-4.pdf
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    References listed on IDEAS

    as
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    4. Tim Brailsford & John C. Handley & Krishnan Maheswaran, 2012. "The historical equity risk premium in Australia: post‐GFC and 128 years of data," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 52(1), pages 237-247, March.
    5. Ivailo Arsov & Ben Shanahan & Thomas Williams, 2013. "Funding the Australian Resources Investment Boom," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 51-62, March.
    6. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    7. Myers, Stewart C, 1984. "The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-592, July.
    8. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
    9. Thomas Williams, 2012. "Exploration and the Listed Resource Sector," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 37-42, September.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. John Freebairn, 2022. "Company Income Tax and Business Investment," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(3), pages 346-360, September.
    2. Gianni La Cava & Callan Windsor, 2016. "Why Do Companies Hold Cash?," RBA Research Discussion Papers rdp2016-03, Reserve Bank of Australia.

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