New Model of Current Account Balances
Managing current account balances – defining the value of the necessary closing level – is perhaps the most exciting daily routine activity of corporate financial managers. The relevant discussion of this subject in Corporate Finance by Brealey and Myers, one of the most popular manuals of today’s...
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| Format: | Article |
| Language: | English |
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University of Miskolc
2010-12-01
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| Series: | Theory, Methodology, Practice |
| Subjects: | |
| Online Access: | https://ojs.uni-miskolc.hu/index.php/tmp/article/view/1359 |
| _version_ | 1797648382309695488 |
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| author | Levente Kovács |
| author_facet | Levente Kovács |
| author_sort | Levente Kovács |
| collection | DOAJ |
| description |
Managing current account balances – defining the value of the necessary closing level – is perhaps the most exciting daily routine
activity of corporate financial managers. The relevant discussion of this subject in Corporate Finance by Brealey and Myers, one of
the most popular manuals of today’s higher education in finances, refers to research conducted over 60 years ago. This manual
applies the Baumol model to current account balance management, starting from the costs of simple inventory management. An
enhancement of the above is the Miller-Orr model, which restricts the volatility of the cash balances between an upper and the lower
limit, and defines the value at one-third as the return point.
Our globalised world is characterized by electronic banking, which has fundamentally changed the entire system of finances.
Research done on figures of the 2000s led to results that were different than before. According to new findings, in modern
accelerated cash management the level of current account balances is not determined by the assumed “inventory management costs”
(through the development of electronic methods, they have decreased drastically, anyhow), rather the habits of cash transaction
management.
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| first_indexed | 2024-03-11T15:31:24Z |
| format | Article |
| id | doaj.art-a3a3d89ced704d3092bd8fa5d441e7bd |
| institution | Directory Open Access Journal |
| issn | 1589-3413 2415-9883 |
| language | English |
| last_indexed | 2024-03-11T15:31:24Z |
| publishDate | 2010-12-01 |
| publisher | University of Miskolc |
| record_format | Article |
| series | Theory, Methodology, Practice |
| spelling | doaj.art-a3a3d89ced704d3092bd8fa5d441e7bd2023-10-27T04:13:56ZengUniversity of MiskolcTheory, Methodology, Practice1589-34132415-98832010-12-01602New Model of Current Account BalancesLevente Kovács0University of Miskolc, Faculty of Economics, Department of Economic Relations Managing current account balances – defining the value of the necessary closing level – is perhaps the most exciting daily routine activity of corporate financial managers. The relevant discussion of this subject in Corporate Finance by Brealey and Myers, one of the most popular manuals of today’s higher education in finances, refers to research conducted over 60 years ago. This manual applies the Baumol model to current account balance management, starting from the costs of simple inventory management. An enhancement of the above is the Miller-Orr model, which restricts the volatility of the cash balances between an upper and the lower limit, and defines the value at one-third as the return point. Our globalised world is characterized by electronic banking, which has fundamentally changed the entire system of finances. Research done on figures of the 2000s led to results that were different than before. According to new findings, in modern accelerated cash management the level of current account balances is not determined by the assumed “inventory management costs” (through the development of electronic methods, they have decreased drastically, anyhow), rather the habits of cash transaction management. https://ojs.uni-miskolc.hu/index.php/tmp/article/view/1359current account balancecurrent account turnovercorporate finance |
| spellingShingle | Levente Kovács New Model of Current Account Balances Theory, Methodology, Practice current account balance current account turnover corporate finance |
| title | New Model of Current Account Balances |
| title_full | New Model of Current Account Balances |
| title_fullStr | New Model of Current Account Balances |
| title_full_unstemmed | New Model of Current Account Balances |
| title_short | New Model of Current Account Balances |
| title_sort | new model of current account balances |
| topic | current account balance current account turnover corporate finance |
| url | https://ojs.uni-miskolc.hu/index.php/tmp/article/view/1359 |
| work_keys_str_mv | AT leventekovacs newmodelofcurrentaccountbalances |