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Canada: Selected Issues

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  • International Monetary Fund

Abstract

This Selected Issues paper looks at the factors behind the accumulation of cash positions by Canadian nonfinancial corporations. Focusing only on listed firms and running a model of changes in cash holdings suggest that greater macroeconomic and business uncertainty may have induced firms to raise the cash buffer at their disposal over the last decade. This is especially the case for firms in the energy and mining sector, which account for the majority of cash accumulation in the sample used in current analysis. The analysis also shows that firms’ high cash balances are typically associated with higher levels of capital expenditure, which bodes well for the acceleration of business investment in the near future.

Suggested Citation

  • International Monetary Fund, 2014. "Canada: Selected Issues," IMF Staff Country Reports 2014/028, International Monetary Fund.
    • Handle: RePEc:imf:imfscr:2014/028
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=41298
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    References listed on IDEAS

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    1. Thomas W. Bates & Kathleen M. Kahle & René M. Stulz, 2009. "Why Do U.S. Firms Hold So Much More Cash than They Used To?," Journal of Finance, American Finance Association, vol. 64(5), pages 1985-2021, October.
    2. Juan M. Sanchez & Emircan Yurdagul, 2013. "Why are corporations holding so much cash?," The Regional Economist, Federal Reserve Bank of St. Louis, issue Jan.
    3. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    4. Lee Pinkowitz & René M. Stulz & Rohan Williamson, 2012. "Multinationals and the High Cash Holdings Puzzle," NBER Working Papers 18120, National Bureau of Economic Research, Inc.
    5. David McLean, R., 2011. "Share issuance and cash savings," Journal of Financial Economics, Elsevier, vol. 99(3), pages 693-715, March.
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    Cited by:

    1. Diewert, W. Erwin & Fox, Kevin J., 2019. "Money and the Measurement of Total Factor Productivity," Journal of Financial Stability, Elsevier, vol. 42(C), pages 84-89.

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