Summary of Cashing in for Growth

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Rating

7 Overall

7 Importance

9 Innovation

7 Style

Recommendation

It seems that, for Japanese firms, cash is king. By holding on to cash rather than investing it or distributing it in dividends, Japanese businesses could be stifling the economic growth that Abenomics is set on achieving. So why do Japanese companies continue to hold large amounts of cash, and what could loosen their purse strings? Though highly technical, this report from economics scholar Galen Sher offers noteworthy insights into how Japan could recharge its economy. getAbstract recommends it to economists, investors and analysts who are on Japan-watch.

In this summary, you will learn

  • What economic implications high levels of corporate cash have for Japan’s economy,
  • Why those cash levels remain so high, and
  • What policies might effectively discourage cash accumulation in order to stimulate wage and economic growth.
 

About the Author

Galen Sher is a PhD candidate in economics at Oxford University.

 

Summary

Since the 1990s, most nonfinancial companies worldwide have held on to more and more cash, so much so that, according to one study, in 2006 the typical US business could have extinguished all its debt with cash. The same was true in Japan in 2013, when cash assets of Japanese nonfinancial companies ...

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