Summary
In the eighties The Netherlands has recorded a marked increase in the quantity of money. This development was notably attended by a rise in money balances of nonfinancial firms. In an attempt to trace the causes of this development, the Dutch central bank conducted a large-scale survey in 1991. The results corroborate previous econometric research on disaggregate Dutch money demand functions which identifies buffering of profits as the main cause of the increased money holdings by firms. The main contribution of the survey is that it reveals pecking order financing behaviour of firms as an important microeconomic reason for this buffer stock mechanism in firms' money holdings.
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The interview study was conducted while the authors were at the Domestic Research Department of the Nederlandsche Bank. Views expressed in this paper are personal and do not necessarily reflect official positions of the Nederlandsche Bank or the International Monetary Fund. Previous versions of this paper have been presented in seminars at CentER, Tilburg and the University of Limburg, Maastricht. We are grateful to Michael Belongia, Harry Garretsen, Lex Hoogduin, Dennis Jansen, Arjo Klamer, Clemens Kool, Peter Schotman, Daniel Thornton and two anonymous referees for their useful comments and suggestions. Of course, the usual disclaimer applies.
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de Haan, L., Koedijk, K.G. & de Vrijer, J.E.J. Buffer stock money and pecking order financing: Results from an interview study among Dutch firms. De Economist 142, 287–305 (1994). https://doi.org/10.1007/BF01431974
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DOI: https://doi.org/10.1007/BF01431974