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Markus Demary / Stefan Hasenclever / Michael Hüther in Intereconomics External Publication 21. January 2021 Why the COVID-19 Pandemic Could Increase the Corporate Saving Trend in the Long Run

Given the global trend in corporate saving over the last decades, the COVID-19 crisis raises doubts about the persistence of companies’ saving behavior due to the losses which have occurred in many companies caused by the isolation of households and by lockdowns.

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Why the COVID-19 Pandemic Could Increase the Corporate Saving Trend in the Long Run
Markus Demary / Stefan Hasenclever / Michael Hüther in Intereconomics External Publication 21. January 2021

Why the COVID-19 Pandemic Could Increase the Corporate Saving Trend in the Long Run

Article in Intereconomics

German Economic Institute (IW) German Economic Institute (IW)

Given the global trend in corporate saving over the last decades, the COVID-19 crisis raises doubts about the persistence of companies’ saving behavior due to the losses which have occurred in many companies caused by the isolation of households and by lockdowns.

Before the pandemic, corporate net lending activities had been increasing for decades due to various factors ranging from the rise in uncertainty after the global financial crisis to the increased reliance on internal funding for research and development expenditures. In Germany, the rise in corporate saving was accompanied by an increase in equity capital and a reduction in the corporate sector’s reliance on bank loans. This article argues that the coronavirus crisis is most likely to interrupt the trend in corporate saving in the short run due to the decline in companies’ revenues. Nonetheless, similar to the pattern observed in the aftermath of the financial crisis, it seems reasonable to conjecture that the COVID-19 shock will strengthen corporate saving in the long run as companies may attempt to restore their liquidity and equity capital buffers to better prepare for future shocks. This will in turn create downward pressure on real interest rates and complicate the conduct of monetary policy.

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External Publication
Why the COVID-19 Pandemic Could Increase the Corporate Saving Trend in the Long Run
Markus Demary / Stefan Hasenclever / Michael Hüther in Intereconomics External Publication 21. January 2021

Markus Demary / Stefan Hasenclever / Michael Hüther: Why the COVID-19 Pandemic Could Increase the Corporate Saving Trend in the Long Run

Article in Intereconomics

German Economic Institute (IW) German Economic Institute (IW)

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The Energy Dependence of Bank Loans
Markus Demary / Niklas Florian Taft IW-Report No. 31 26. May 2023

The Energy Dependence of Bank Loans

Russia's war against Ukraine has highlighted the vulnerability of the Federal Republic of Germany to Russian energy imports, especially natural gas.

IW

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Michael Hüther IW-Policy Paper No. 3 24. March 2023

This time is different but still risky: Banking crisis instead of financial crisis

The current crisis of some American and European banks inevitably triggers fears that an international banking crisis could lead to a new financial crisis. But things in 2023 are very different from those in 2007.

IW

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