What are the causes of the growing trend of excess savings in the corporate sector of developed countries.

RODRIGO PEREZ ARTICA; LISANA B. MARTINEZ; LEANDRO BRUFMAN

Bahia Blanca

Congreso; VI Congreso Nacional de Estudiantes de Posgrado en Economía (CNEPE); 2013

This paper analyzes annual accounting data for a sample of 5,000 publicly traded manufacturing firms from Germany, France, Italy, Japan, and the United Kingdom. The analysis uses data from 1997 to 2011 and finds an increasing trend of excess savings (defined as the difference between gross saving and capital formation) and a gradual decline of gross capital formation. This trend is accompanied by a steady deleveraging process and a decrease in the share of operating assets in total assets. This process is more acute among the more credit constrained, the more volatile, and the less dynamic firms.