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This paper aims to examine whether cash holding can enhance the financial stability of firms under the impact of the Covid-19 pandemic. We utilize quarterly data of 285 Vietnamese listed firms from quarter 1-2011 to quarter 3-2020 for our analyses. The results reveal that cash holding has a positive effect on financial stability during the pandemic crisis. Additionally, cash holdings of two quarters ahead also have significant impact on firms' financial stability. We also find that cash holding is particularly crucial for firms that are more vulnerable to the pandemic, for examples firms headquartered in big cities, firms from Consumer Discretionary, Material, Energy industry, large firms, and firms with a history of high sale growth. Altogether, our study highlights the importance of holding cash and early planning for cash holding as an effective risk management method for firms, especially for those that are more vulnerable to an economic shock.

Cash Holding and Financial Stability during a Crisis: A Case Study of Vietnamese Firms in Covid-19 Pandemic