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Monetary Policy, Cash Flow and Corporate Investment: Empirical Evidence from Vietnam

1
Faculty of Accounting and Auditing, Banking University of Ho Chi Minh City, Ho Chi Minh City 700000, Vietnam
2
English Faculty, Foreign Trade University, Ho Chi Minh City 700000, Vietnam
3
Faculty of Business Administration, Banking University of Ho Chi Minh City, Ho Chi Minh City 700000, Vietnam
4
Faculty of Finance, Banking University of Ho Chi Minh City, Ho Chi Minh City 700000, Vietnam
5
School of Banking, University of Economics Ho Chi Minh City, Ho Chi Minh City 700000, Vietnam;
*
Author to whom correspondence should be addressed.
J. Risk Financial Manag. 2019, 12(1), 46; https://doi.org/10.3390/jrfm12010046
Received: 7 February 2019 / Revised: 1 March 2019 / Accepted: 13 March 2019 / Published: 19 March 2019
(This article belongs to the Special Issue Currency Crisis)
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Abstract

This paper examines the relationships between macroscopic determinants (typically, monetary policies) and microscopic factors (mainly, cash flows and other controlling variables) on corporate investment. By employing system-GMM estimation for the 250 Vietnamese non-financial firms, the authors find that the expansionary monetary policy not only encourages the borrowing activities but also results in more corporate investment activities over the period from 2006 to 2016. Noticeably, the internal cash flow is also significant factor, which enhances the activities of corporate investment. Finally, there are differences between internal cash flow effects on corporate investments between two groups, divided by three theoretical criteria. To recapitulate, our implications highlight the importance of monetary policy stability for sustainable growth in corporate investment in Vietnam. View Full-Text
Keywords: monetary policy; cash flow; investment; GMM monetary policy; cash flow; investment; GMM
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
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My Tran, L.; Mai, C.H.; Huu Le, P.; Bui, C.L.V.; Nguyen, L.V.P.; Huynh, T.L.D. Monetary Policy, Cash Flow and Corporate Investment: Empirical Evidence from Vietnam. J. Risk Financial Manag. 2019, 12, 46.

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