Economies of scale and the demand for money

Paul A. Natke, Gregory A. Falls

Research output: Contribution to journalArticlepeer-review

3 Scopus citations


Cross-sectional data from four Surveys of Small Business Finance demonstrate that economies of scale in money holding exist, that these economies appear to be increasing over time, and that the magnitudes are greater than those estimated for large US corporations. Firms not practising several specific cash management techniques and firms facing constraints in the credit market hold lower money balances. Minority-owned firms exhibit economies of scale similar to the overall sample but cash management practices and credit constraint variables generally do not influence their money holding behavior. Scale economies vary widely across industries but overall means are relatively stable over time.

Original languageEnglish
Pages (from-to)283-298
Number of pages16
JournalSmall Business Economics
Issue number3
StatePublished - 2010


  • Cash management
  • Credit constraints
  • Firm demand for money
  • US small businesses


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