Journal article
Cash Heterogeneity and the Payout Channel of Monetary Policy
The Journal of finance (New York)
06/01/2026
DOI: 10.1111/jofi.70059
Abstract
This paper provides novel empirical evidence that cash-rich firms have higher equity payouts and higher stock prices in response to expansionary monetary policy surprises. Stock prices rise despite weak cash-flow, investment, and credit responses to monetary policy. I rationalize the empirical evidence in a heterogeneous-firm New Keynesian model where firms finance investment with cash and equity issuance. Monetary easing weakens precautionary cash demand, leading cash-rich firms to optimally allocate excess funds to shareholders. Since payouts are procyclical, cash-rich firms earn higher returns in expansionary periods. My findings highlight a payout channel through which monetary policy impacts asset prices.
Details
- Title: Subtitle
- Cash Heterogeneity and the Payout Channel of Monetary Policy
- Creators
- Altan Pazarbasi - Bilkent University
- Resource Type
- Journal article
- Publication Details
- The Journal of finance (New York)
- DOI
- 10.1111/jofi.70059
- ISSN
- 0022-1082
- eISSN
- 1540-6261
- Publisher
- Wiley
- Number of pages
- 48
- Language
- English
- Electronic publication date
- 06/01/2026
- Academic Unit
- Finance
- Record Identifier
- 9985175261802771
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