Macroeconomic Uncertainty and Corporate Cash Holdings: Evidence from the Vietnam Stock Exchange

Abstract

This study investigates the relationship between macroeconomic uncertainty and firms’ cash holdings in Vietnam, an emerging market characterized by strong state control. We use a fixed-effects regression model on a panel dataset of 4,090 firm-quarter observations from 279 companies listed on HOSE and HNX (2009–2023) and the World Uncertainty Index for Vietnam (WUIVNM) as a proxy for macroeconomic uncertainty. The findings indicate that firms tend to increase cash holdings in response to heightened macroeconomic uncertainty. Further analysis reveals that this effect is more pronounced among firms with low financial constraints, operating in less competitive industries, with limited growth opportunities, or without state ownership. To address potential endogeneity, an instrumental variable approach is applied. This research contributes to the literature by providing empirical evidence from a tightly regulated emerging economy, offering valuable implications for both corporate financial strategies and macroeconomic policymaking.