English, Article, Journal or magazine article edition: Inventories, Liquidity, and Contractual Risk in African Manufacturing Marcel Fafchamps Jan Willem Gunning; Remco Oostendorp

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Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Inventories, Liquidity, and Contractual Risk in African Manufacturing
Author
  • Marcel Fafchamps Jan Willem Gunning
  • Remco Oostendorp
Physical Description
  • preprint
Notes
  • This paper tests whether the stockout/​precautionary motive applies to inventories and liquid assets held by Zimbabwean manufacturing firms. The evidence indicates that involvement in imports and exports is a major source of contractual risk. Concerns about the timeliness of input deliveries and late payment by clients are primary motives behind the accumulation of inputs and, to a lesser extent, the constitution of cash reserves. This is consistent with the role of inventories as a hedge against stockout risk. We find little evidence of inventory and liquidity build-up against market risk, but this may be an artifact of the way fluctuations in sales are measured in the data. Perfect fungibility between various inventories and between inventories and liquid assets is rejected. Implications for policy are discussed.
  • RePEc:wop:stanec:97020
Language
  • English
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