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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

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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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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

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

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Financing Gaps of Companies during the Covid-19 Pandemic
Markus Demary / Anna-Maria Hagenberg / Jonas Zdzralek IW-Report No. 50 28. September 2022

Financing Gaps of Companies during the Covid-19 Pandemic

For firms’ business and investment decisions their access to finance is a critical determinant. In times when access to finance becomes tight, corporations face either higher capital costs or they have to postpone their investment decisions when credit lines ...

IW

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Markus Demary / Anna-Lena Herforth / Jonas Zdrzalek IW-Report No. 16 13. April 2022

The new inflationary environment: How persistent are the current inflationary dynamics and how is monetary policy expected to respond?

We argue that the period of low inflation has come to an end based on six structural factors, which define the new inflationary environment.

IW

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