-constrained previously decreased their savings more (or increased their savings less) relative to unconstrained firms. However, this firm …-level effect did not lead to a decrease in aggregate corporate savings as conjectured by the theory. Our sector level regressions … show that corporate savings increased after financial reforms, and more so for sectors more dependent on external finance …

, investments, and employment, and these effects are concentrated among low liquidity firms. Precautionary savings motives aggravate … requested loan amount. These results point to the amplifying effect of precautionary savings motives in the transmission of …