Systemic, Sectoral Risk and the Myth of a Corporate Savings Glut
This note investigates the nature of corporate savings in South Africa. The first part focuses on the empirical impact of uncertainty on investment in the manufacturing sector, while the second part discusses factors influencing corporate cash hoar...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/887671531920857295/Systemic-sectoral-risk-and-the-myth-of-a-corporate-savings-glut-background-note http://hdl.handle.net/10986/30195 |
| Summary: | This note investigates the nature of
corporate savings in South Africa. The first part focuses on
the empirical impact of uncertainty on investment in the
manufacturing sector, while the second part discusses
factors influencing corporate cash hoarding and assesses
whether South African firms’ behavior is peculiar. The
results show that sectoral and systemic risks – our measures
of uncertainty – consistently impede investment in the South
African manufacturing sector, which could explain in part
for firms increasing their savings. Further reasons for that
behavior include precautionary measures when economic
conditions are unfavorable, increasing appetite for
investment abroad at the expense of domestic investment,
cash provision for amortization purposes and balance sheet management. |
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