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Cited by 300

The DOI matches its Crossref record; 61 of the 61 references it cites were found in a registry or an index.

Financial Development and the Cash Flow Sensitivity of Cash

Open access
Khurana, Inder K., Martin, Xiumin, Pereira, Raynolde·2006·Journal of Financial and Quantitative Analysis
DOI 10.1017/s0022109000002647
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Abstract

Prior research posits that market imperfections and the lack of institutions that protect investor interests create a divergence between the cost of internal and external funds, thereby constraining firms' ability to fund investment projects through external financing. Financial constraints force firms to manage their cash flows to finance potentially profitable projects. A related stream of research documents that financial constraints due to costly external financing are more pronounced in underdeveloped financial markets. We examine the influence of financial development on the demand for liquidity by focusing on how financial development affects the sensitivity of firms' cash holdings to their cash flows. Using firm-level data for 35 countries covering about 12,782 firms for the years 1994–2002, we find the sensitivity of cash holdings to cash flows decreases with financial development. We also consider additional implications of firms' cash flow sensitivity of cash with respect to firm size and business cycles. Overall, we provide new cross-country evidence of the role of financial development on financial constraints.

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Metadata

Authors
Khurana, I. K., Martin, X., & Pereira, R.
Venue
Journal of Financial and Quantitative Analysis
Publisher
Cambridge University Press (CUP)
Published
2006-12
Volume
41
Issue
4
Pages
787-808
ISSN
  • 0022-1090 (ISSN-L)
  • 1756-6916
DOI
10.1017/s0022109000002647
OpenAlex
W3123109570
Cited by
300
References
61
FWCI
30.86
Type
journal article
Language
en
Open access
green

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CoChat. (2026). Citation check: Financial Development and the Cash Flow Sensitivity of Cash. https://app.cochat.ai/papers/10.1017/s0022109000002647
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Khurana, I. K., Martin, X., & Pereira, R. (2006). Financial Development and the Cash Flow Sensitivity of Cash. Journal of Financial and Quantitative Analysis. https://doi.org/10.1017/s0022109000002647

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