Transactions motive

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Transactions motive

A desire to hold cash in order to conduct cash-based transactions.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Transactions Motive

The desire of an economic actor to maintain sufficient funds in a bank account in order to write checks on that account for daily needs and wants. A person with higher income has a greater transactions motive than a person with lower income; that is, that person wants to have more money in order to spend more. In Keynesian economics, the transactions motive is one of three reasons persons demand liquidity. See also: Liquidity preference, precautionary motive, speculative motive.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
big firms supporting small, credit-rationed customers) or transaction motive.
5) reducing transaction costs (transaction motive).
Still, each of the motives related to competitive strategy drives the supply of trade credit to a greater extent than the transaction motive. Over A of surveyed firms claimed that the desire to reduce transaction costs did not have any impact on their decisions regarding payment arrangements with their customers, with another 28% assessing this impact as low and a further 28%--as moderate.
Transaction motive establishes that firms hold cash to make payment for day to day operating transactions particularly purchase of goods and services.
As per transaction motive, firm may obtain external financing by paying both variable and fixed costs.
This paper argues that currency substitution refers to a country's residents for the transaction motive, precautionary motive, portfolio motive (i.e.
As part of a cautious motive of the foreign currency requirements in order to cope with the sudden appearance of transaction demand, the other part is to seize the sudden emergence of favorable investment opportunities, so the precautionary motive were combined with the transaction motive and portfolio motives, discuss foreign currency demand and portfolio transactions and cautious motivation and prudent motive of the foreign currency demand.
Kaynes [5] suggests that there are three incentives for reserve cash holdings including transaction motive, precautionary motive and speculative motive.
Our findings confirm the transaction motive and Pecking order theory in corporate cash holdings behavior but disaffirm the relation between size and firms' cash holdings.
The transaction motive for holding cash is probably best expressed by using a narrow definition of consumption.
Thus, both the transaction motive and the financing motive appear to be economically significant
According different motives related to holding cash, this paper classifies them into three main categories: The transaction motive, the precautionary motive and the agency theory.
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