Search Results (5)

Most of the canonical macroeconomic models simulate liquidity anomalies by changing the economic fundamentals or adding massive financial shock to firms’ collateral constraints, but a few facts somehow tell a different story. Instead of relying on the exogenous shocks, we introduce uncertainty into an otherwise classical liquidity framework and try to answer what worsens the aggregate liquidity in the absence of exogenous simulations and what a firm dynamics and financing strategy would be. Our analysis shows that (1) uncertainty induces agents to make decisions under the worst-case scenario and hence generates a unique expectation threshold that drags market (or firms) liquidity from sufficiency to insufficiency even without any shock or economic changes. (2) Precautionary saving occurs before the real liquidity shortage as the expectation shifts, causing firms to secure external financing by raising the equity issuing price and hoarding liquid assets, such as fiat money, against liquidity tightening. (3) To achieve liquidity stability and sustainability, an extra mathematical constraint is supplemented for the uniqueness and the existence of equilibrium under uncertainty. Other properties of firms’ intertemporal allocations, such as the bid-ask spread and return of holding of the illiquid asset, are derived. Moreover, some approaches for further empirical research are discussed. Full article

The present research is focused on the 3-Polker coins issued during 1619–1627 by Sigismund III Vasa, King of Poland. A major financial crisis took place at that time due to the 30-year War, which started in 1619. There are two theories among historians concerning the silver depreciation of these coins. The most common theory (generally accepted without proof) is that the later years of issue are depreciated below 60% Ag. The second theory is based on the medieval sources that indicate inflation during the years from 1621–1625, but the medieval source only refers to the inflation of the type of coins and does not mention the issuer. Therefore, in this study, we use modern investigation techniques and materials science methods to help historians elucidate the aforementioned aspects regarding the medieval period. The XRD investigation results are in good agreement with the SEM-EDX elemental analysis. The coins from 1619 and 1620 have high silver content, namely, 86.97% and 92.49%, which corresponds to good silver. The amount of Ag found in the coins from 1621–1625 issituated in the range of 63.2–74.6%. The silver titleis suddenly restored in 1626 at about 84.3% and is kept in a good range until the end of this decree under Sigismund III in 1627. In conclusion, the second theory was partly validated by our experimental results, certifying the currency depreciation during 1621–1625, but the silver title was not lower than 54.2%. Notably, even this depreciated silver title assures a good quality of the 3-Polker coins compared to similar coins issued in other countries that were copper–silver-plated. Therefore, the 3-Polker coins were preferably hoarded at that time.Small alterations in the mint mark’s design were observed in all the depreciated coins compared to the good ones. This might be a sign for an expert to identify the depreciated coins, a fact which requires supplementary investigations. The silver title’s restoration in 1626 also came with a complete change of the mintmark. Full article

In recent years, more and more funds circulate internally in the financial field, which is called “financial hoarding”. After calculations, the scale of China’s financial hoarding was 242,178 billion yuan in the first quarter of 2003 and jumped to 1,801,706 billion yuan in the fourth quarter of 2016, which increased by nearly 7.4 times in the past 14 years and accelerated after 2014. The phenomenon that large amounts of money deviate from the real economy to virtual economy is called “shift from real economy to virtual economy”. The large scale of financial hoarding will inevitably influence the economic growth in China. Does financial hoarding promote or inhibit the economy? Does the relationship change with the economic growth rate? To address this issue, this paper first provided theoretical analysis of the relationship between financial hoarding and economic growth. Then, it used the data of the first quarter of 2003 through the fourth quarter of 2016 in China for empirical analysis. The results revealed two facts. Firstly, the simultaneous equations model showed that financial hoarding and economic growth promote each other in the long run and financial hoarding can be conducive to economic growth. Secondly, the MS-VAR model showed that the relationship between financial hoarding and economic growth changed with the economic growth rate. In addition, financial hoarding had a positive effect on the economic growth under both medium and high economic growth regimes, but to a greater extent in high economic growth regimes. Full article

The management of cash requires careful considerations to allow firms to benefit from proper resource allocations while mitigating agency issues. Accounting comparability can play an important role in tackling information asymmetry and agency cost, thus enabling managers to hoard more cash. This research aims to investigate the link between accounting comparability and cash holdings in an emerging market. Using a sample of listed firms in Vietnam from 2010 to 2019 and System Generalized Method of Moments, the study finds that comparability is positively associated with corporate cash holdings, confirming the value of the former as an effective governance mechanism. Additionally, we find a non-linear impact of comparability on cash holdings; in other words, comparability specifically enhances cash holdings for firms with high levels of comparability. We further document that cash holdings improve firm performance only for firms with high levels of comparability. Such evidence implies that only firms with high levels of financial statement comparability show commitment to tackle agency cost and information asymmetry. Full article

Meat products represent a significant share of US consumer food expenditures. The COVID-19 pandemic directly impacted both demand and supply of US beef and pork products for a prolonged period, resulting in a myriad of economic impacts. The complex disruptions create significant challenges in isolating and inferring consumer-demand changes from lagged secondary data. Thus, we turn to novel household-level data from a continuous consumer tracking survey, the Meat Demand Monitor, launched in February 2020, just before the US pandemic. We find diverse impacts across US households related to “hoarding” behavior and financial confidence over the course of the pandemic. Combined, these insights extend our understanding of pandemic impacts on US consumers and provide a timely example of knowledge enabled by ongoing and targeted household-level data collection and analysis. Full article