Volume 15, Issue 1 (2015)                   QJER 2015, 15(1): 141-157 | Back to browse issues page

‎ 20.1001.1.17356768.1394.15.1.6.2

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Komijani A, Tabatabaee Zavareh H R. The Cost of Capital and Liquidity Requirements of Non-financial Firms; Case Study of Manufacturing Companies Listed in Tehran Stock Exchange. QJER 2015; 15 (1) :141-157
URL: http://ecor.modares.ac.ir/article-18-7982-en.html
The Cost of Capital and Liquidity Requirements of Non-financial Firms; Case Study of Manufacturing Companies Listed in Tehran Stock Exchange
Akbar Komijani1 , Hamid reza Tabatabaee Zavareh * 2
1- Professor of Economics, University of Tehran
2- Economic Researcher
Abstract:   (10713 Views)
Regarding the differences among firms on financial position and access to various financial resources, the selection of a proper variable, which represents actual cost of capital of a firm, is of great importance in explaining the firms demand for money.  In order to improve the estimation of interest rate elasticity of demand for money by manufacturing firms, this paper computes the cost of capital for each firm. Using firm level panel data for 161 manufacturing companies listed in Tehran Stock Exchange, the demand for money is estimated over the period 2000 to 2010. It is found that (a) the firms in which the cost of capital is higher, have low real balances; (b) the average cost of capital and its variations implies that the weight of cost of capital should be reexamined by monetary authority; and (c) the sensitivity of demand for money to fluctuations in wage  is more than to interest rate.
Keywords: Demand for Money, Interest Rate, Monetary policy, Panel Data
Full-Text [PDF 264 kb]   (6149 Downloads)    
Article Type: Research Paper | Subject: C01 - Econometrics|C13 - Estimation|C23 - Models with Panel Data|C33 - Models with Panel Data|D21 - Firm Behavior|D23 - Organizational Behavior; Transaction Costs; Property Rights|E41 - Demand for Money|E42 - Monetary Systems; Standards; Regimes; Governme
Received: 2012/10/17 | Revised: 2015/03/16 | Accepted: 2013/07/21 | Published: 2015/03/21
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