The corporate cash holding maintained by firms is an area of extensive research literature that argues its importance to the firm in maximizing value of shareholders wealth. The factors on which these holdings depend are largely firm specific. However, he motives that drives firm’s appetite to hold liquid asset call for a need to look at these factors on a macroeconomic level. We investigate the macroeconomic determinants of corporate cash holdings, together with firm specific factors and put forth the potential effect of macroeconomic environment of a country upon the levels of liquid assets that firm hold. We use panel model methodology to analyze such effects for 100 non-financial firms of Pakistan over a period of 16 years from 2000 to 2015. The firm specific factors include firm’s size, leverage, sales growth, and cash flows of the firm, whereas macroeconomic factors are represented by GDP growth rate, government budget deficit, and interest rate. We find that all macroeconomic factors are significant and consistent in their impact on the cash holding levels. Among firm specific variables, we conclude that only leverage and firm size are significant determinant of cash holdings. The study recommends that while deciding upon the levels of corporate cash holdings that a firm should maintain to achieve its motives, namely, the transaction, precautionary and speculative motives, assessing macroeconomic conditions of the country should be a very relevant practice. Supervisor:- Dr. Arshad Hassan