This study examines the impact environmental policies have on corporate cash holdings. Specifically, the study focuses on how differences in stringency of environmental policies impact the patterns in cash management across 40 countries. The findings show that in the countries with more stringent environmental policies maintain a higher level of cash holdings. Additionally, stringency of environmental policies influences stability of cash reserves, deviation from target level of cash and cash holding speed of adjustment. However, the effect of market-based environmental policies on various aspects of cash management often differs from the effect of non-market-based policies. The findings are robust to inclusion of different measures of cash, and a wide range of firm-level characteristics, country-level governance, economic and cultural variables.