Systemic, Sectoral Risk and the Myth of a Corporate Savings Glut

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...

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Bibliographic Details
Main Authors: Dadam, Vincent, Viegi, Nicola
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2018
Subjects:
CORPORATE PROFITS
REINVESTMENT
CAPITAL INVESTMENT
CORPORATE SAVINGS
UNCERTAINTY
RISK
INVESTMENT CLIMATE
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
id okr-10986-30195
recordtype oai_dc
spelling okr-10986-301952021-05-25T09:16:36Z Systemic, Sectoral Risk and the Myth of a Corporate Savings Glut Dadam, Vincent Viegi, Nicola CORPORATE PROFITS REINVESTMENT CAPITAL INVESTMENT CORPORATE SAVINGS UNCERTAINTY RISK INVESTMENT CLIMATE 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. 2018-08-10T20:58:26Z 2018-08-10T20:58:26Z 2018-04-30 Working Paper 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 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Working Paper Africa South Africa
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic CORPORATE PROFITS
REINVESTMENT
CAPITAL INVESTMENT
CORPORATE SAVINGS
UNCERTAINTY
RISK
INVESTMENT CLIMATE
spellingShingle CORPORATE PROFITS
REINVESTMENT
CAPITAL INVESTMENT
CORPORATE SAVINGS
UNCERTAINTY
RISK
INVESTMENT CLIMATE
Dadam, Vincent
Viegi, Nicola
Systemic, Sectoral Risk and the Myth of a Corporate Savings Glut
geographic_facet Africa
South Africa
description 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.
format Working Paper
author Dadam, Vincent
Viegi, Nicola
author_facet Dadam, Vincent
Viegi, Nicola
author_sort Dadam, Vincent
title Systemic, Sectoral Risk and the Myth of a Corporate Savings Glut
title_short Systemic, Sectoral Risk and the Myth of a Corporate Savings Glut
title_full Systemic, Sectoral Risk and the Myth of a Corporate Savings Glut
title_fullStr Systemic, Sectoral Risk and the Myth of a Corporate Savings Glut
title_full_unstemmed Systemic, Sectoral Risk and the Myth of a Corporate Savings Glut
title_sort systemic, sectoral risk and the myth of a corporate savings glut
publisher World Bank, Washington, DC
publishDate 2018
url 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
_version_ 1764471388376137728

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