Liquidity Management Research Articles

Bank Profitability in Indonesia During COVID-19 Outbreak

Bank Profitability in Indonesia During COVID-19 Outbreak

CFO social capital, liquidity management, and the market value of cash✰

We find that firms with CFOs who have extensive social connections within the finance industry hold less precautionary cash. CFO connections matter more than CEO connections, reflecting the preeminence of CFOs among C-level executives in cash management and negotiating access to corporate finance. Firms reduce the proportion of assets held in cash by seven percentage points in the two years following CFO turnover and the appointment of a CFO with finance industry connections. The stock market valuation of incremental cash holdings of firms with well-connected CFOs is lower than for other firms, consistent with investor recognition of CFO social capital as an alternative means to address constraints on external capital.

Effect of Risks Management on the Financial Performance of Listed Deposit Money Banks in Nigeria

This study examined the effect of risk management on the financial performance of listed DMBs in Nigeria. Adopting correlation research design, the target population was all the listed DMBs in Nigeria as at 31st December, 2022 and were nineteen (19) in number. Out of the 19 banks, 16 were purposively selected as sample based on the criteria that, the bank must have been listed before 31st December 2017 and also have complete annual report and account over the period of five years from 2018-2022. The study used descriptive statistics and panel regression analysis to analyze the data collected, and the results of the analyses revealed that, credit risk management, market risk management and capital adequacy risk management have positive and significant effect on the financial performance of the listed DMBs in Nigeria over the period of the study. However, liquidity risk management was found to have negative but insignificant effect on the financial performance of the banks. Hence, the study concluded that; effective risk management have positive and significant effect on the financial performance of listed DMBs in Nigeria. Based on these findings, this study recommends that; the management of listed DMBs in Nigeria should improve and strengthen their liquidity management strategies, while keeping adequate watch on credit risk, market risk, and capital adequacy risk to further improve their financial performance. Therefore, further studies could look into the effect of effective risk management process (risk identification, assessment, monitoring, and controlling process) on the financial performance of DMBs. Also, future studies could consider the impact of the adoption of IFRS on risk management and financial performance of listed DMBs in Nigeria.

The real effects of borrower-based macroprudential policy: Evidence from administrative household-level data

We analyze the effects of borrower-based macroprudential policy at the household level. We exploit administrative Dutch tax and housing records in conjunction with the introduction of a mortgage loan-to-value (LTV) limit. We find that the regulation sharply reduces mortgage leverage with bunching at the LTV limit. While (regulation) affected households reduce total leverage and interest expenses, they also decrease cash balances to satisfy the LTV limit, generating an important solvency-liquidity trade-off. Nevertheless, affected households experience less financial distress after the introduction of the LTV regulation. Moreover, these households experience better liquidity management and smoother consumption following income loss. Overall, our results highlight the key financial stability and real effects of borrower-based macroprudential policy.

Regulating cash holdings: Assessing lost returns in mutual funds✰

Mutual funds have traditionally attracted retail investors seeking diversified market exposure. While the focus has historically been on asset liquidity and quality, recent attention has turned to assessing fund liquidity and the risks of asset fire sales. Our study analyzes Israeli mutual funds’ daily holdings and flows over an extensive eight-year period, revealing a significant issue: fund managers tend to maintain excessive cash levels, burdening the industry by more than 2 % of assets under management (AUM). These findings highlight the urgency of implementing advanced liquidity management tools to navigate redemption risks effectively. Moreover, our research stresses the need for flexible, market-oriented regulations and enhanced industry transparency. By establishing liquidity risk management guidelines, regulators can optimize investor returns and mitigate potential systemic risks associated with cash allocations in mutual funds.

Environmental Consequences of Unregulated Sanitation Practices in Urban Watercourse Neighborhoods in Sub-Saharan Africa: A Case Study of Yaoundé City Cameroon

Rapid urbanization and population growth in developing countries are driving people to settle in high-risk areas. Indeed, because of the very high cost of land in city centers, people prefer to settle in non-Aeficandi areas sometimes. Consequently, this choice results in inadequate sanitation due to the lack of access to basic services, and in turn to poor waste management. The residents of Yaoundé, particularly those living in precarious neighborhoods near urban watercourses, face the challenges of unregulated management of both liquid and solid waste. This situation contributes to the degradation of the urban landscape. The aim of this study is to assess people’s sanitation practices concerning both solid and liquid waste management, examining their impacts on the living environment and susceptibility to environmental diseases. The research methodology encompasses direct field observations, comprehensive documentary research, and surveys of 250 households within the study area. The findings show that people mainly deposited their solid waste in the watercourses that run through their locality and wastewater in the yard or on street. Most latrines are built in proximity to watercourses with holes for the overflow of faeces. As consequences of these practices, the results showed hydrosystem pollution, environmental degradation marked by flooding, and high vulnerability to diseases such as malaria, diarrhea, typhoid fever, respiratory infections and cholera.
 
 Received: 27 September 2023 / Accepted: 18 January 2024 / Published: 5 March 2024

Why Liquidity Matters: A Financial Planning and Investment Discussion for Plastic Surgeons.

Plastic surgeons should understand the importance of maintaining liquidity as part of a robust household financial planning and investment strategy. Although investors rightly focus on achieving solid long-term returns, our experience suggests that many plastic surgeons often pay too little attention to liquidity management in their outlook, and some may experience stress as a result. This article discusses why liquidity management matters both in terms of each surgeon's unique career and in the context of today's dynamic investment opportunities and risks. We also discuss how best to understand the trade-offs and costs associated with household debt. Finally, we present simple self-diagnostic questions to help surgeons assess whether their current financial planning addresses key liquidity risks. This article belongs to a series that introduces relevant wealth and investment subjects for practicing plastic surgeons, students in plastic surgery, and support function professionals. This discussion is not meant to be exhaustive nor constitutes investment advice regarding any asset class, strategy, or examples cited herein.

How the COVID-19 shock influenced companies listed on the WSE and how they managed their liquidity

Abstract The aim of the article is to analyze the liquidity of non-financial companies listed on the Warsaw Stock Exchange. The article addresses the liquidity of the examined group against the background of the entire market and its relationship with debt, profitability, growth and the risk of bankruptcy, including in the context of the COVID-19 pandemic. The article examines the assertion that COVID-19 influenced the practice of aggressive liquidity management in terms of indebtedness, profitability, value creation, and risk of bankruptcy. The research revealed that public companies behaved differently than the entire sector by pursuing an aggressive management policy and that the pandemic caused an even greater decrease in the static liquidity ratios while cash conversion cycle (CCC) increased. In addition, the decline in EPS growth and the increase in Z-Score during the pandemic could mean that enterprises focused on reducing the risk of bankruptcy rather than maximizing value during the pandemic shock. Before the pandemic, CCC influenced DER, and during the pandemic, static indicators began to play a more important role in the financial strategies of the surveyed companies. The research results add to liquidity theory and its impact on shaping financial strategy, especially during a financial crisis. In addition, an analysis of the impact of liquidity on earnings per share (EPS) growth and Z-Score was conducted. They represent the creation of value and the assessment of the risk of bankruptcy, making this paper particularly insightful. The results obtained provide valuable guidance to decision-makers managing liquidity and debt in corporate finance.

딥러닝을 활용한 서울시 주택 유형별 전세가격에 영향을 미치는 요인분석

1. CONTENTS
 (1) RESEARCH OBJECTIVES This study used deep learning DNN model to empirically analyze the factors affecting Chonsei prices of each housing type in Seoul.
 (2) RESEARCH METHOD The output variables are set as the apartment Chonsei price index, the single-family home Chonsei price index, and the townhouse Chonsei price index, and the input variables are the apartment sales price index, single-family home sales price index, townhouse sales price index, number of employed people, and corporate bond yield. housing construction permit records. The spatial scope was set to Seoul, and the temporal scope was set from January 2007 to October 2023.
 (3) RESEARCH FINDINGS Looking at the LIME(Local Interpretable Model-agnostic Explanations) of each Chonsei prices input variable by housing type, when the apartment sale price index is -0.66 or less, the single-family house sale price index is in the range of -0.66 to -0.38, and the townhouse sale price index is -0.59 or less. it was found to have a negative impact on the Chonsei price index for each housing type. When the corporate bond yield was in the range of -0.89 to -0.23 for apartments, -0.89 to -0.23 for single-family homes, and -0.89 to -0.23 for townhouses, it was found to have a positive (+) impact on the Chonsei prices index for each housing type.
 2. RESULTS
 The implications are that although there are differences by housing type, the Chonsei price appears to be greatly influenced by the sale price and interest rates. Therefore, the government must continuously monitor the Chonsei price and sale price by housing type to ensure housing stability for the working class and middle class and appropriate liquidity management.

A Comparative Financial Liquidity Analysis of Fatima and Fauji Fertilizer Companies Limited

The primary purpose of this research is to reasonably study the liquidity position of two major organizations in the fertilizer sector, namely Fatima and Fauji Fertilizer Companies Limited. The annual secondary panel data was taken from 2010 to 2018. For that, annual published reports were collected from the official website of the State Bank of Pakistan. The Excel tool analyzed the data through tables and bar graphs. However, the results concluded that the financial position of Fauji fertilizer was better in terms of liquidity management than Fatima fertilizers. Therefore, Fatima Fertilizer is advised to improve its liquidity position, which may simultaneously reduce its business risk. Otherwise, it will be damaging to its business. However, liquidity plays an essential role in business, so both companies must invest in the most liquid assets, such as the T- bills and other marketable securities, to improve their liquidity position. Finally, both companies must try to improve their net profit as well.

A q$q$ Theory of Internal Capital Markets

ABSTRACTWe propose a tractable model of dynamic investment, spinoffs, financing, and risk management for a multidivision firm facing costly external finance. Our analysis formalizes the following insights: (i) Within‐firm resource allocation is based not only on divisions' productivity, as in winner‐picking models, but also their risk; (ii) firms may voluntarily spin off productive divisions to increase liquidity; (iii) diversification can reduce firm value in low‐liquidity states, as it increases the spinoff cost and hampers liquidity management; (iv) corporate socialism makes liquidity less valuable; and (v) division investment is determined by the ratio between marginal and marginal value of cash.

MODERN THREATS TO THE FINANCIAL SECURITY OF THE ENTERPRISE

Introduction. In recent years, the need to secure financial stability has become increasingly critical, spanning from the broader macroeconomic scale down to businesses and individual households. This concern remains a major and highly relevant issue, especially in the context of Ukraine's currently unstable economic climate.Purpose. The article aims at identifying the main threats to the financial security of enterprises and developing recommendations for their elimination. Methods. The article uses the methods of analysis and synthesis to determine the main parameters of external and internal threats to the financial security of enterprises, and abstract methods to make theoretical generalizations and conclusions of the study. Results. The article summarizes a research study on the primary threats to a business's financial security. It delves into the various components and structural elements that constitute an enterprise's financial security. The study also outlines strategies to mitigate these threats, focusing on the integration of key subsystems that collectively form a comprehensive approach to managing financial security. This integrated system encompasses strategic management of financial security, financial analysis and control, optimization of financial processes, investment policy, and the management of liquidity and risks. Conclusion. Analyzing and categorizing threats to financial security based on their functional components offers a pathway to develop targeted strategies that enhance both the specific components and the overall financial security of an enterprise. It's crucial to recognize that the array of threats can differ greatly between different enterprises. To safeguard a company's financial security in today's economic climate, it's essential to classify these threats based on various factors: their origin, area of impact, likelihood of occurrence, duration of effect, and severity. This detailed identification is a critical step in making informed decisions to mitigate the adverse effects on the financial health and ongoing economic stability of the business.

CASH AND LIQUIDITY MANAGEMENT ANALYSIS OF COMPANIES IN IMPROVING PROFITABILITY RATIOS ON THE INDONESIAN STOCK EXCHANGE (IDX) IN THE FOOD & BEVERAGE SUBSECTOR

Cash and liquidity management are critical aspects in optimizing the financial performance of a company, especially in the capital market such as the Indonesia Stock Exchange (IDX). This study aims to investigate the impact of cash management and corporate liquidity in improving profitability ratios, with a focus on the Food & Beverage subsector on the IDX. Purposive sampling in this study with multiple linear regression data analysis and descriptive statistics. The findings of this study conclude that profitability is affected by cash management, whereas profitability is not affected by liquidity. Furthermore, the research highlights the importance of efficient cash management practices in maximizing profitability and overall financial health. By effectively managing cash flows and maintaining adequate liquidity levels, companies in the Food & Beverage subsector can improve their financial performance and potentially attract more investors on the IDX. This study provides valuable insights for companies looking to optimize their cash and liquidity management strategies to drive sustainable growth and success in the competitive capital markets of Indonesia.

Effect of Liquidity Management On the Financial Performance of Nigerian Oil and Gas Firms

The Nigerian Oil and Gas industry, as a result of the COVID-19 pandemic, continues to be plagued with numerous economic challenges that affect its liquidity position and hinders it from delivering on its core mandate of profitability. Hence, the purpose of this research was to look into the effect of liquidity management on the financial performance of Nigerian oil and gas firms. Current Ratio (CUR), Quick Ratio (QUR), Cash Ratio (CAR), and Return on Capital Employed (ROCE) were explored as proxy variables for liquidity management and financial performance, respectively, using an ex-post facto research approach. The study used a purposive sampling approach to collect secondary data, which was based on the availability of data at the time of the investigation. These figures were collected from five Nigerian oil and gas firms' annual financial reports, which spanned the years 2012 through 2021. The data was analyzed using descriptive statistics and regression analysis. Results from the analysis revealed that Quick Ratio and Cash Ratio has a positive insignificant impact on Return on Capital Employed while Current Ratio has a negative significant impact on Return on Capital Employed. Based on the findings, managers of oil and gas firms should adopt effective liquidity management policies that guarantee an optimal level of liquidity that improves its profitability and enables them operate with a reasonable margin of safety.

Redefining agile supply chain practices in the disruptive era: a case study identifying vital dimensions and factors

Purpose This paper aims to uncover the key enablers of an agile supply chain in the manufacturing sector amidst disruptions such as pandemics, trade wars and cross-border challenges. The study aims to assess the applicability of existing literature to manufacturing and identify additional industry-specific enablers contributing to the field of supply chain management. Design/methodology/approach The research methodology is comprehensively described, detailing the utilization of extent literature and semistructured interviews with mid- and top-level executives in a supply chain. The authors ensure the robustness of the data collection process and results interpretation. Findings The study identifies six essential dimensions of an agile supply chain: information availability, design robustness, external resource planning, quickness and speed, public policy influencing skills and cash flow management. The study provides valuable insights for industry professionals to develop agile supply chains capable of responding to disruptions in a rapidly changing world. Research limitations/implications This study is limited by its focus on the manufacturing sector, and future research may explore the applicability of these findings to other industries. By focusing on these essential dimensions identified in the study, managers can develop strategies to improve the agility and responsiveness of their supply chains. In addition, further research may investigate how these enablers may vary in different regions or contexts. Practical implications The COVID-19 pandemic has forced executives to reconsider their sourcing strategies and reduce dependence on suppliers from specific geographies. To ensure business continuity, companies should assess the risk associated with their suppliers and develop a business continuity plan that includes multisourcing their strategic materials. Digital transformation will revolutionize the supply chain industry, allowing for end-to-end visibility, real time insights and seamless integration of business and processes. Companies should also focus on creating a collaborative workforce ecosystem that prioritizes worker health and well-being. Maintaining trust with stakeholders is crucial, and firms must revisit their relationship management strategies. Finally, to maintain business leadership and competitiveness during volatile periods, the product portfolio needs to be diversified and marketing and sales teams must work in tandem with product teams to position new products accordingly. Social implications This work contributes substantially to the literature on supply chain agility (SCA) by adding several new factors. The findings result in a more efficient and cost-effective supply chain during a stable situation and high service levels in a volatile situation. A less complex methodology for understanding SCA provides factors with a more straightforward method for identifying well-springs of related drivers. First, the study contributes to reestablish the factors such as quickness, responsiveness, competency, flexibility, proactiveness, collaboration and partnership, customer focus, velocity and speed, visibility, robustness, cost-effectiveness, alertness accessibility to information and decisiveness as applicable factors for SCA. Second, the study suggests a few more factors, such as liquidity management, Vendors’ economic assessment and economic diversity, that are the study’s unique contributions in extending the enablers of SCA. Finally, public policy influencing skills, local administration connects and maintaining capable vendors are the areas that were never considered essential for SCA. These factors have emerged as a vital operational factor during the lockdown, and academicians may consider these factors in the future to assess their applicability. Originality/value This study provides new insights for decision-makers looking to enhance the resilience and agility of their supply chains. The identification of unique enablers specific to the manufacturing industry contributes to the existing body of literature on agile supply chains in the face of disruptions.

Liquidity Management and Profitability of Deposit Money Banks in Nigeria: An Impact Analysis

This study empirically examined the impact of liquidity management on profitability of deposit money banks in Nigeria. The specific objectives were to determine the impact of cash management on banks’ return on asset, evaluate the impact of shareholders’ capital on banks’ return on asset and ascertain the relationship between loan to deposit ratio and return on assets of banks. Expost facto design was adopted. The data used for this study were collected from Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporations (NDIC) covering the period 1995-2021. Data collected were analyzed using descriptive statistics and multiple regression analysis. Findings revealed that cash management and shareholders’ capital have significant relationship with banks’ return on assets. It however showed that there is significant relationship between loan to deposit ratio and return on assets. Based on the findings, it recommended that the bank management device efficient cash management policies to enhance their profitability

Optimizing Financial Performance: Deciphering the Interplay of Liquidity and Profitability in Bank Muscat, Sultanate of Oman

This study explores the intricate relationship between liquidity and profitability at Bank Muscat, Oman, examining various financial indicators such as Cash Reserve Ratio (CRR), Total Deposits to Total Assets (TDTA), Capital Adequacy Ratio (CAR), Total Loans to Total Deposits (TLTD), Liquid Assets to Total Assets (LATA), Liquid Assets to Total Deposits (LATD) and Liquidity Risk Exposure (LRE). The findings reveal that Liquid Assets to Total Assets (LATA) significantly correlates with Return on Assets (ROA), while other indicators show varied relationships. Notably, the Capital Adequacy Ratio (CAR) has a substantial negative impact on both ROA and Return on Equity (ROE). Cash Reserve Ratio (CRR), Total Deposits to Total Assets (TDTA), and Total Loans to Total Deposits Ratio (TLTD) have significant impact on ROE. Regression models exhibit exceptional explanatory power, highlighting liquidity and financial indicators' role in explaining profitability variability. Despite some liquidity ratios affecting profitability, others like Liquid Assets to Total Assets (LATA), Liquid Assets to Total Deposit Ratio (LATD), and Liquidity Risk Exposure (LRE) lack conventional significance levels. The recommendations encompass optimizing liquidity management, fortifying capital adequacy, monitoring deposit-to-asset ratios, evaluating liquidity risk exposure, assessing liquid asset allocation, and implementing dynamic risk management frameworks. Future research should consider comparative analyses across banks or regions, advanced statistical methodologies, and exploration of nuanced factors influencing liquidity-profitability dynamics, contributing to comprehensive financial management strategies for banks.

The Effects of Working Capital Management on Firms’ Efficiency: Case of Turkish and Zimbabwean Commercial Banks.

This research studies management of working capital and its impact on commercial bank efficiency in Zimbabwe and Turkey. The study examined the financial statements of 10 banks from each country between 2009 and 2022. The research evaluated performance of banks using return on asset (ROA) as well as return on equity (ROE) as efficiency indicators. Working capital was assessed through the current ratio, current ratio, and total cash ratio, while bank size and leverage were considered as control variables. Correlation analysis, estimation equations, and regression models were used to examine the data, which included pooled cross-sectional and time series data, using SPSS (version 20.0). The data demonstrated a favourable and substantial association between ROE and the current ratio, demonstrating that adequate management of working capital has a beneficial impact on the banks’ profitability. A negative correlation, in contrast, between current ratio and ROE was noted, implying a balance of profitability and liquidity. Furthermore, no statistically significant association was seen between cash payment ability, total cash ratio, and ROA. However, a significant negative correlation was identified between the current ratio and ROA. Comparing the two countries, Turkish banks demonstrate superior liquidity management, potentially attributed to their adherence to the Basel III reform guidelines. The study recommends that Zimbabwean banks adopt similar measures to enhance their competitiveness in the international banking sector. In conclusion, the research emphasises the significance of good management of working capital in maximising bank efficiency. The findings provide valuable insights for policymakers and practitioners in the banking industry, urging them to implement liquidity management strategies for sustained success.

OPEN MARKET OPERATIONS: EXPECTATIONS AND CHALLENGES

The RBI move of sucking out excess liquidity through OMOs clearly shows the tightening attitude to control inflationary pressures. Monetary policy got a hawkish tint as the market did not expect such a suck out policy of excess liquidity from the RBI, though the retail inflation was at 6.83 per cent in August 2023. Larger government borrowings and abundant supply of liquidity are the great concerns to RBI. The RBI's emphasis on active liquidity management was influenced by inflation risks and financial stability. Fiscal Dominance Liquidity Management Challenge and Exchange Rate Volatility are the challenges ahead. OMOs effectiveness depends on the central bank's ability to accurately time and size these operations.

The Reason for Silicon Valley Bank Collapse and Relevant Suggestion

Against this background, the primary objective of this study is to analyse the variables and underlying causes that contribute to the potential collapse of Silicon Valley Bank (SVB). Based on extensive research and analysis, the internal structure of SVB reveals that several key causes have contributed to the company's bankruptcy. These elements include the adverse economic conditions, the impact of the pandemic, government policies, and internal management issues inside SVB. The findings of the research underscore the impact of the prevailing economic downturn and the decision of the United States government to raise interest rates on SVB, a financial institution with a singular portfolio. Consequently, SVB is compelled to address the dearth of capital by consistently liquidating its assets. The failure of SVB Bank can be attributed to its tight association with the financial market and the overall state of the economy. The potential collapse of a financial institution might exert adverse effects on the overall stability of the financial market. Hence, it is contended that organisations should pursue portfolio diversification, enhance their liquidity management, and safeguard their cash-based assets in order to mitigate risk diversification.