Determinants of Working Capital in Emerging Markets: Do Economic Developments Matter?

Çetenak, Emin Hüseyin; Vural, Gamze; Sökmen, Ahmet Gökhan

doi:10.1007/978-3-319-44591-5_26

Cited by 10 publications

(14 citation statements)

References 10 publications

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“…Authors of a large number of studies have also tried to investigate the determinants of WCM by using WCR[2] as a sole proxy of working capital (Abbadi and Abbadi, 2013; Al-Talab et al , 2010; Çetenak et al , 2017; Cuong and Nhung, 2017; Gill, 2011; Hill et al , 2010; Nazir and Afza, 2009; Salawu and Alao, 2014; Wasiuzzaman and Arumugam, 2013). Based on the data from North America, Hill et al (2010) explored the impact of different firm characteristics and industry practices on the working capital behavior of 3,343 nonfinancial US firms.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In exploring the determinants of WCR in emerging markets, Çetenak et al (2017) used a sample of 1,253 industrial firms operating in 14 emerging countries and showed that WCR is affected by firm characteristics, industry and country-level factors. In the same context, Rehman et al (2017) employed a two-step GMM estimator to analyze the determinants of WCR and the time taken by Chinese firms to adjust their WCM policies.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Empirically, the vast majority of prior studies have reported a highly negative association between debt levels and WCR (e.g. Abbadi and Abbadi, 2013; Al-Talab et al , 2010; Çetenak et al , 2017; Chiou et al , 2006; Nazir and Afza, 2009; Rehman et al , 2017; Wiguna and Wasistha, 2017). Hence, we expect a negative association between leverage and WCR.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

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Determinants of working capital behavior: evidence from Egypt

Moussa

2019

IJMF

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Purpose The purpose of this paper is to empirically analyze and identify key factors affecting working capital behavior of companies listed on the Egyptian Stock Exchange. Design/methodology/approach Working capital requirement and cash conversion cycle were used to proxy working capital behavior. The study explored nine main factors widely discussed in previous research to explain working capital behavior: operating cash flow, growth opportunities, performance, firm value, age, size, leverage, economic conditions and industry type. The study employed a panel data analysis for 68 listed Egyptian industrial firms for the period 2000–2010. Different techniques of the generalized method of moments were used to test the validity of the research hypotheses. Findings The results show that working capital behavior is affected by various factors related to firm characteristics, economic conditions and industry type. Originality/value This study provides financial managers with a better understanding of the impact of different internal and macroeconomic factors on working capital behavior in an emerging market, such as Egypt’s.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Hypotheses Developmentmentioning

confidence: 99%

See 1 more Smart Citation

Determinants of working capital behavior: evidence from Egypt

Moussa

2019

IJMF

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“…A vast majority of the literature examines the link between WCM and firm performance. It is widely believed that WCM practices and needs vary considerably during normal operating environments and economic crisis (Çetenak et al, 2017;Ren et al, 2019). Existing studies have mainly focussed on examining the relationship between WCM and business performance under normal operating conditions (Deloof, 2003;Lazaridis and Tryfonidis, 2006;Garcia-Appendini and Montoriol-Garriga, 2013;Afrifa and Padachi, 2016;Mathuva, 2014;Akinlo, 2012;Pais and Gama, 2015;Baker et al, 2017;Baker et al, 2019;Afrifa and Padachi, 2016;Simon et al, 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Economic conditions have a significant impact on working capital requirements and its financing (Enqvist et al, 2014;Çetenak et al, 2017). Prior studies (Filbeck and Krueger, 2005;Wasiuzzaman and Arumugam, 2013;Mathuva, 2014;Takon and Atseye, 2015;Simon et al, 2019) argue that macroeconomic conditions, such as inflation rates, interest rates and gross domestic product, exert significant influence on working capital efficiency.…”

Section: Working Capital Management and Economic Conditionsmentioning

confidence: 99%

Economic downturns and working capital management practices: a qualitative enquiry

Simon

Sawandi

Kumar

et al. 2021

QRFM

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Purpose This study aims to explore changes in working capital management (WCM) practices in response to economic downturns, especially during the coronavirus pandemic. Design/methodology/approach This study adopts an interpretative approach. This paper used semi-structured interviews with 2 finance directors and 13 top managers for data collection. This paper used thematic analysis for analysing the interview data. Findings The study findings suggest that the traditional ways of managing working capital may no longer be sufficient during a crisis. Instead, dynamic financing, trade credit policy and continuous staff training to develop new skills are alternative WCM practices to navigate the challenges of a crisis. Further, this paper finds that economic conditions, such as inflation rates, interest rates, exchange rates and government policy, negatively affect WCM. Practical implications The study findings highlight practical issues that may help firms meet their present and future financing needs, manage their day-to-day operational activities and enhance performance, both operational and financial. The study is beneficial for regulators in understanding a firm’s constraints during crises and respond appropriately. Originality/value This is the first study, to the best of the knowledge that uses a qualitative approach to investigate the impact of economic downturns on WCM practices of firms. Thus, this study offers new insights into the fundamentals of WCM practices during crises.

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On the role of institutional factors in shaping working capital management policies: Empirical evidence from European listed firms

Anton

Nucu

2022

Economic Systems

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Determinants of Working Capital in Emerging Markets: Do Economic Developments Matter?

Cited by 10 publications

References 10 publications

Determinants of working capital behavior: evidence from Egypt

Determinants of working capital behavior: evidence from Egypt

Economic downturns and working capital management practices: a qualitative enquiry

On the role of institutional factors in shaping working capital management policies: Empirical evidence from European listed firms

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