The rise in cash holdings of Danish companies

Economic Memo - August 2022 - No. 8

Authors Renkin, Tobias; Bonin, Simone Maria
Subject Danish Economy; Current economic and monetary trends; Statistics
Type Economic Memo
Year 2022
Published 8 August 2022
Abstract icon We show that the cash holdings of a typical Danish company have increased after the 2007/08 financial crisis. Especially the cash holdings of small companies have seen a strong increase. The increase in cash holdings coincides with a decrease in the use of loan financing for the typical company, which suggests a decrease in loan demand or supply to these companies. The development of cash holdings is also driven by a strong selection effect: companies with low cash holdings have been especially likely to exit during and after the financial crisis.