Determinants of cash holding in South Africa: Evidence from non-financial firms

2020-06-17 19:33:44 Viewed: 698 Downloads: 110
  • Determinants of cash holding in South Africa: Evidence from non-financial firms

      Atoko Kasongo

     Publisher: African Review of Economics and Finance

    Pub: 2020-06-17 19:33:44

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  • Cash holding is one of the most significant components of a firm’s current assets. The benefit of holding cash revolves around choosing the optimal timing of investment and avoiding under-price issues. This paper investigates the determinants of corporate cash holding of 80 non-financial firms in South Africa between 2007 and 2017. The Arellano-Bover/Blundell-Bond generalized method of moments (GMM) estimates indicate that leverage, firms growth opportunity, business confidence, economic growth and political stability have a negative effect on cash holdings, whereas debt maturity and cashflow exerts a positive influence. Other factors such as firm size, dividends payments, inflation rate and financial crises have an insignificant impact on company cash holdings.

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  • Keywords

    Cash holding, Growth opportunities, Firm size, Leverage, Business confidence.


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