Variable Reduction and Determinants of Working Capital Management on Profits for Ghanaian Banks

Asare-Kumi, Abeku; Darkwah, Kwasi A.; Nortey, Ezekiel N. N.; Chapman-Wardy, Charlotte

doi:10.19044/esj.2016.v12n7p316

Cited by 6 publications

(9 citation statements)

References 8 publications

(5 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Apart from that country-specific context matters a lot when it comes to firm-level studies as African countries vary greatly in economics and population dynamics and thus the factors that are found in one country in Africa may not be applicable in another country and that is why this study is centred on the Ghanaian economy. All previous known studies on the subject matter in Ghana have been carried out on the banking sector which is just one of the numerous sectors of the country (see: Agyei & Yeboah, 2011;Agyei et al, 2013;Asare-Kumi, Darkwah, Nortey, & Chapman-Wardy, 2016). In our study, we have included all sectors that have got their firms listed on the Ghana stock exchange since no sector is immune to the challenges of managing working capital.…”

Section: Introductionmentioning

confidence: 99%

Determinants of working capital requirement in listed firms: Empirical evidence using a dynamic system GMM

Nyeadi¹,

Sare²,

Aawaar

2018

Cogent Economics & Finance

View full text Add to dashboard Cite

Working capital management is a critical element in the survival of every firm. While the effective management of working capital leads to value creation in firms, ineffective management of working capital, on the other hand, does not only destroy value but can lead to the eventual solvency of the firm. The search for the factors that influence working capital management has, therefore, become a worthwhile exercise embarked upon by both managers and scholars. The main aim of this study is thus to empirically investigate the determinants of working capital requirement on the listed firms in Ghana. In examining the determinants of working capital requirements, 28 firms listed on the Ghana Stock Exchange were used for a time period of 8 years, spanning from 2007 to 2014. The study employed a dynamic panel system of General Methods of Moments (GMM) to test the hypotheses. This estimator has the ability to produce consistent and unbiased results when even there is an endogeneity in the model. This, therefore, makes our results more efficient and reliable. First, the study suggests that working capital in Ghanaian firms is determined by profitability, age, sales growth, GDP growth, operating cycles and leverage. Second, it is realized that while age, profitability and operating cycle strongly impacts positively on working capital, GDP growth, sales growth and leverage inversely correlate with working capital.

show abstract

Section: Introductionmentioning

confidence: 99%

Determinants of working capital requirement in listed firms: Empirical evidence using a dynamic system GMM

Nyeadi¹,

Sare²,

Aawaar

2018

Cogent Economics & Finance

View full text Add to dashboard Cite

show abstract

“…IDENTIFYING THE SIGNIFICANT DETERMINANTS USING PRINCIPAL COMPONENT ANALYSIS. -Kumi et al (2016), the Kaiser-Meyer-Olkin (KMO) statistic used to measure the data sampling is acceptable if the value is greater than or equal to 0.5. In this study, the KMO value is 0.547 which means that the data is adequate.…”

Section: Resultsmentioning

confidence: 99%

“…In this study, the KMO value is 0.547 which means that the data is adequate. Assare-Kumi et al (2016) also mention that when the probability value of Bartlett's Test of Sphericity is less than the significance level which is significant value 0.05, the Principal Component Analysis can be used for the analysis. Besides, in this study the Bartlett's test is significant with p= 0.000.…”

Section: Resultsmentioning

confidence: 99%

Selecting The Most Significant Determinants that contributes to Islamic banks profitability using Principal Component Analysis

Ismail¹,

Shahri²,

Basir³

2018

IJARBSS

View full text Add to dashboard Cite

The existence of Islamic banks that grow rapidly in every corner of the world has caused strong competition among them and other conventional banks in Malaysia. This requires the banks management to choose wisely on the determinants that make them to remain strong and relevant in the Islamic banking sector. The main purpose of this study is to determine internal and external significant determinants for Islamic banks in Malaysia using Principal Component Analysis (PCA). The Kaiser-Meyer-Olkin (KMO) was applied in this study to measure the data sampling is acceptable and adequate. While, and Bartlett's Test is used to validate the internal and external component. The significant banking determinants selected for the study include deposit ratio, operating efficiency and market concentration. The result shows that the internal and external significant determinants are Bank Size and Gross Domestic Product. The study utilized secondary data from year 2010 until year 2016 for 13 Islamic banks in Malaysia.

show abstract

“…Nortey et al [6] recently applied principal components factor analysis in determining the significant factors that influence working capital management for manufacturing companies in Ghana. Asare-Kumi et al [8] also recently applied a combination of principal component factor analysis and regression analysis in the determination of significant factors that influence working capital management of profit for Ghanaian banks.…”

Section: Introductionmentioning

confidence: 99%

An Estimation of Working Capital Management on Profit Using Logistic Regression and Discriminant Analysis

Darkwah

Nortey

Asare-Kumi

et al. 2019

JEMT

Self Cite

View full text Add to dashboard Cite

Aims: This paper estimates working capital management on profit using logistic regression and discriminant analysis on manufacturing and industrial firms in Ghana. Study Design: Research Paper. Place and Duration of Study: Ghana, Secondary data for 2009 to 2014. Methodology: Data in the form of ratios were computed from the audited annual financial reports of 13 manufacturing and industrial firms listed on the Ghana Stock Exchange covering the period from 2009 to 2014.The ratios were used to determine the profitability of the firms. Results: The results showed that the logistic regression of the dependent variable (Profit) on the independent variables such as the Average Collection Period, the Inventory Conversion Period, the Average Payment Period, the Growth rate, the Debt Ratio, the Current Ratio and the Company Size were found to be significant and that there was no difference in variances for two firm classifications. This result implies that the linear discriminant function is effective in discriminating between a firm which effectively managed its working capital from one which did not. Conclusion: This study showed that the binary logistic regression model estimates correctly at least 75% of firm’s likelihood of managing working capital on profit while correctly discriminating the firms as having an effective management.

show abstract

Variable Reduction and Determinants of Working Capital Management on Profits for Ghanaian Banks

Cited by 6 publications

References 8 publications

Determinants of working capital requirement in listed firms: Empirical evidence using a dynamic system GMM

Determinants of working capital requirement in listed firms: Empirical evidence using a dynamic system GMM

Selecting The Most Significant Determinants that contributes to Islamic banks profitability using Principal Component Analysis

An Estimation of Working Capital Management on Profit Using Logistic Regression and Discriminant Analysis

Contact Info

Product

Resources

About