Tuesday, January 26, 2016

What's Responsible For The Corporate Savings Glut?

Many of our largest corporations are sitting on huge piles of cash.  This article provides several explanations for the changes in corporate financial policy.  They used to borrow large sums from financial intermediators to finance investment.  Today they are able to finance investments with their own cash but they are not doing so. You can choose among the explanations, some are related, but none of them are positive.  The implication is that corporations don't see opportunities for investing their cash in the future.  Many are simply buying or merging with other large corporations.

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