Trapped Cash

Cash is usually considered a company’s most flexible asset. But what happens when that cash is sitting in another country, subject to capital controls, foreign-exchange restrictions, repatriation rules or regulatory approvals? Trapped Cash explores the financial problem that emerges when money exists on a company’s balance sheet but cannot move freely across borders. The book examines how this gap between reported cash and usable liquidity can influence cash holdings, investment decisions, financing choices and the internal allocation of capital. Moving from the foundations of capital controls to theory, institutional frameworks and empirical evidence, the book examines how firms respond when their money becomes difficult to move. It connects macroeconomic policy with the decisions made inside companies, bringing together corporate finance, foreign exchange, regulation and treasury management. The research examines firms across different policy environments and considers evidence from countries including China, India, Argentina and Brazil. It also looks at why multinational companies can sometimes manage these restrictions differently from domestic firms, and what happens when restrictions become more severe.