nr 087 - Non-Linear Target Adjustment in Corporate Liquidity Mmanagement: An Endogenous Thresholds Approach

DNB Working Papers
Date 3 February 2006

We provide new empirical evidence on non- linear liquidity management in Dutch firms. Our results reveal that liquidity adjustment from below the target is significantly faster than from above. We find no evidence for bands of inaction around the target. Keywords: Corporate liquidity management; Non-linear adjustment; Endogenous thresholds; Panel approach. JEL Classifications: C33; E41; G3