Innovation prompts firms to hold more cash – IMF paper
Firms must hold enough liquidity to insure against risky research and development
Firms looking to increase research and development are likely to hold more cash, according to a study published by the International Monetary Fund.
In their paper, Konrad Adler, JaeBin Ahn and Mai Chi Dao examine how increased globalisation and open trading arrangements have affected how much firms engage in research and development.
“As globalisation is associated with expanding export opportunities, the returns to innovation increase as successful innovators are able to capture a larger
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