The impact of economic policy uncertainty and inflation risk on corporate cash holdings

Bijoy Chandra Das, Fakhrul Hasan*, Soma Rani Sutradhar

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)
10 Downloads (Pure)


This paper analyses the joint effects of Economic Policy Uncertainty (EPU) and inflation risk on the Corporate Cash Holdings (CCH) of US firms from 2011 to 2021. The baseline results suggest that EPU and inflation risk positively impact CCH. Moreover, we find the same results between inflation risk and CCH. However, EPU and CCH are negatively associated. Additionally, construction (finance) firms hold higher (lower) cash at the time of EPU and inflationary risk. We also find that firms hold higher (lower) cash during Democrat (Republican) presidential terms. The two-step system Generalized Method of Moments approach used to control the potential endogeneity issues indicates the same results and supports the baseline findings.
Original languageEnglish
Pages (from-to)865-887
Number of pages23
JournalReview of Quantitative Finance and Accounting
Issue number3
Early online date7 Nov 2023
Publication statusPublished - 1 Apr 2024

Cite this