Liquidity management and corporate investment during a financial crisis
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Campello, Murillo, et al. "Liquidity management and corporate investment during a financial crisis." Review of Financial Studies 24.6 (2011): 1944-1979.
1. Explain the purpose of the article and the research method used (2-3 paragraphs)
2. Provide an overview and analysis of the article (2-3 paragraphs)
3. Provide an overview of liquidity management during the crisis (3-4 paragraphs)
4. Provide an overview of liquidity and real corporate policy during the crisis (3-4 paragraphs)
5. Explain the major conclusions of the article (3-4 paragraphs)
6. Provide a summary of the article implications (2-3 paragraphs)
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The expert explains the purpose of the article and a research method. "Liquidity management and corporate investment during a financial crisis." is examined.
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Purpose of Article
The article named as 'Liquidity Management and Corporate Investment during a Financial Crisis' focuses over the analysis of internal liquidity, external fund, and real corporate decision that was made at the time of 2008-2009 crisis. The purpose of this article is to identify the situation of corporate world at the time of this crisis and evaluate the answer of the question; how companies got over from this credit shock (International Monetary Fund, 2012). Overall, the article helps in gaining knowledge regarding the ways of liquidity management that organizations used subsequent to the crises.
The researcher made use of survey to present the results of this situation analysis. Survey is a key method of research, which can be used by researcher to analyze or identify any theoretical problem with the contribution of selected people. Through this method, the article becomes more justifiable in all the terms. The survey was conducted in the time duration of 2009 to 2010 with the sample size of approx 400 organizations of United States (OECD, 2010). The survey was conducted with the help of e-mail as e-mails were sent to the CFOs of selected organizations.
Overview of Article
The management of organizational activities at the time of crises is really a difficult task. The crisis of 2008-2009 occurred due to the irresponsible behavior of banks and bothered whole country's economy severally. At the time of this crisis, several organizations faced problems related to managing liquidity and to take investment related decisions. This crisis made it difficult to initiate credit lines because banks were not having money and were not able to provide loan to anyone (Allen, Carletti & Krahnen, 2011). Companies were forced to select a substitute between credit lines and internal liquidity.
The management of liquidity was a huge issue to maintain performance and cost both for all firms of United States. The study contains importance of credit line aspect in the management of liquidity internally and externally both. The investment decisions become more crucial at that time. Most of the companies moved towards credit lines to save their credit and invest effectively (Carrel, 2010). Path of credit line was the only strong point for ...
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