Liquidity Management Research Articles

Factors Affecting Commercial Banks’ Capital Adequacy Ratios in Gulf Cooperation Council (GCC) Countries

This study seeks to identify factors that influence bank capital adequacy ratios for a sample of consists of 62 commercial banks listed on the stock markets operating in GCC countries over the time between 2011 and 2018 was used. To deal with the problems of the data set, we utilize the PCSE method. The empirical results suggested that among the CAMELS model variables, capital ratio, management efficiency, earning capacity, liquidity management, and sensitivity have a positive statistical significant influence on bank capital adequacy ratios. In contrast, Asset quality, market concentration, and bank size have a negative effect on commercial banks' capital adequacy ratios. Concerning macro-economic variables, the empirical results suggested that economic growth and inflation rate influence bank capital adequacy ratios.

Pressure-Driven Phase Separation Based on Modified Porous Mesh for Liquid Management in Microgravity.

Surface tension becomes the main force influencing the gas-liquid interface in microgravity environment. The instability of the gas-liquid distribution is a menace for spacecraft missions. Passive phase separation based on porous material is a promising technique for microgravity liquid management and advanced life support systems. Here, the mechanism of pressure-driven phase separation based on porous material is experimentally investigated, highlighting the synergistic influence of single-phase flow, breakthrough failure, and self-healing ability on liquid acquisition capability. The major parameters characterizing the separation efficiency are the breakthrough threshold pressure and the flow resistance. A fabrication strategy which elicits the surface wettability and maintains the original surface morphology is proposed and verified to increase the critical breakthrough threshold pressure without introducing extra flow resistance. Moreover, the modified mesh is integrated into a screen channel liquid acquisition device. The improvement of the overall separation performance is evaluated in an antigravity delivery experiment, where the acceleration of liquid is -g0. It has been demonstrated that the fabrication strategy increases the achievable flow rate over 80% and the reseal flow rate over 200% for gas-free water delivery. This work enriches the understanding of phase separation based on porous material and provides an alternative method for liquid management in microgravity.

LIQUIDITY RISK AND FINANCIAL PERFORMANCE OF DEPOSIT TAKING SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN KENYA

Purpose: To investigate the effect of liquidity risk on financial performance of DT-SACCOs in Kenya
 Materials and Methods: The study will adopt descriptive research design with data comprising of secondary, panel data which will be collected from the 175 DT-SACCOs for the period of five years between the years 2016-2020. Census sampling will be adopted where all the 175 DT-SACCOs will be considered in the analysis. Data will be collected from audited financial statements and other relevant reports submitted by the DT-SACCOs to SASRA.
 Results: Financial performance of DT-SACCOs has been unstable and fluctuating over the years as measured by ROA. In 2016, ROA was 2.45 percent which rose to 2.69 percent in 2017. In 2018, it dropped to 2.40 percent before rising to 2.60 percent in 2019 and again rising to 2.65 percent in 2020. One the other hand, liquid assets to total assets ratio has been reducing. In 2016 it was 12.49 percent, 11.85 percent in 2017, 11.77 percent in 2018, and 11.62 in 2019 only to rise to 14.43 in 2020 (SASRA Report, 2020). This reflects the oscillation in liquidity thereby posing liquidity risk. As reflected by the existing empirical literature, there is an inconsistency and consensus on the research findings on whether liquidity risk affects financial performance of DT-SACCOs in Kenya.
 Unique contribution to theory, Practice and Policy: Scholars and other researchers interested in the SACCO sub-sector will benefit from the findings of this study. The findings will add to the body of knowledge existing in this field and provide opportunities for further research in this area. Results from the study will be useful to SASRA and other policy-makers in the SACCO sub-sector to strengthen their regulatory framework as well as in development of a more robust liquidity monitoring policy and enhancement of liquidity management practices. The results will be beneficial to SACCO managers and the board members as it will highlight how profitability is affected by liquidity risk thereby developing more robust liquidity monitoring policy as well as enhancement of oversight on liquidity management practices. SACCO members may get an impetus to continuously hold the management accountable on the level of the profitability. This is so because the members stand to benefit most if liquidity risk is low. In addition, it may lead to members’ satisfaction and trust in the societies and hence increased share contribution.

Developing the Efficient System of Organization Governance Based on Optimization of Its Counterpart Liabilities

The efficiency of any organization work and its financial wellbeing depend mainly on policy of managing debt receivable and its results. It is explained by the fact that debtor liabilities form the current company assets by 30–40% on average. To provide liquidity and solvency organization top management shall not allow the excessive immobilization of own working capital and its freezing in the form of non-repaid counterpart liabilities. At the same time to minimize debt receivable in current condition of company functioning is not possible. The principle cause of debt receivable rise is high competition on food and service market, due to which companies offer to their clients different conditions of settlement by contracts. This practice results in cash deficiency and can have a negative impact on finance standing of the company, which requires using different tools that could provide the timely repay of liabilities by counterparts. The article substantiates that only complex and systematic application of different methods of debt receivable optimization can give an opportunity to reach the result and raise efficiency of organization work. The effective control over debt receivable is possible, if the system is built that allows to get operative information and encashment of indebtedness without exposing the company to risks, as its excessive amount and low quality threaten profitability and solvency of the organization.

Determinants of capital structure in the hospitality industry: Impact of clustering and seasonality on debt and liquidity

Volatile seasonal demand and geographic clustering of firms are two important factors affecting the capital structure of hospitality firms. In this paper, we investigate the capital structure determinants of hospitality firms regarding the effects of seasonality and geographic clustering. A fixed-effects panel data model was estimated using data on all hospitality firms in Norway from 2008 to 2018. Our empirical findings reveal that the seasonality created by foreign tourists increases the share of long-term debt in the capital structure. Further, the clustering of hospitality firms in a region enhances firm reliance on short-term debt, in that firm liquidity is negatively associated with the degree of clustering, suggesting that severe competition drains cash for which short-term debt serves as a substitute. These findings have important implications for financial management of firms in the hospitality industry as the degrees of seasonality and clustering significantly affect their asset financing and liquidity management behavior.

Semi-mandatory Dividend Policy and Investment Efficiency: Evidence from Listed Companies in China

Abstract Using the new regulatory policy in 2008 as a natural experiment, this paper examines the impact of Semi-mandatory Dividend Policy (hereinafter referred to as the policy) on investment efficiency. It shows that the policy significantly improves the investment efficiency of the experimental group. The improvement effect of the policy is realized by alleviating the agency problem and increasing the stock liquidity. Further study finds that the policy significantly reduces the investment-cash flow sensitivity and increases the cash-cash flow sensitivity of the experimental group. Affected by the policy, companies implement relatively conservative investment decisions and active liquidity management decisions. However, in companies with poor accounting information quality or strong refinancing demand, the effect of improvement on investment efficiency is weakened. JEL classification numbers: K22, G35, G38. Keywords: Semi-mandatory Dividend Policy, Investment Efficiency, Cash Flow.

Environmental Regulation and Corporate Cash Holdings: Evidence From China’s New Environmental Protection Law

Exploiting the 2014 Environmental Protection Law (EPL) in China as quasi-natural experiments, we adopt a difference-in-differences approach to examine the impact of environmental regulation on corporate cash holdings. We document that heavy-polluting firms increase their cash holdings 15% more than non-heavy-polluting firms due to stringent environmental regulation. Further tests show that the heightened environmental uncertainty, the limited access to bank loans, and the decline in obtaining government subsidies for heavy-polluting firms are three plausible channels that allow environmental regulation to increase corporate cash holdings. The effects of environmental regulation on cash holdings are stronger for firms without political backgrounds and those in regions with less dependent on the secondary sector. Overall, our results offer original evidence showing how environmental regulation in emerging economies affects firms’ liquidity management decisions and support the precautionary effect of cash holdings.

Analysis o the State of The Problem of Radioactive Waste in Nuclear Medicine

Topical issues of solid and liquid radioactive waste management in the divisions of radionuclide diagnostics and radionuclide therapy of domestic medical organizations are considered. The compliance of
 the established practice of handling with the relevant requirements of the Rospotrebnadzor regulatory
 documents and the recommendations of the ICRP and the IAEA was considered. The presence of a
 number of provisions is shown that are not scientifically substantiated and do not correspond to international recommendations and long-term practice of Russian and world nuclear medicine. A number
 of proposals have been developed for the introduction of appropriate changes in the developed normative documents intended for practical use after the “regulatory guillotine".

The challenging journey to floating: How did both the steering of the transition and COVID19 transform the domestic Forex Market in Africa?

This article investigates the impacts of transition process steering and the COVID19 pandemic on domestic forex market behavior. To do so, we conducted a comparative analysis based on various GARCH family models and the case of four African countries which adopted different transition paths from fixed to intermediary and/or floating regimes. Our main empirical result is that smooth and gradual transition allows for a better adaptation of the domestic market actors, resulting in improved liquidity management and shocks absorption than countries with forced regime switch. We also notice a significant fallout from the COVID19 pandemic on economies where the regime transition was abrupt as the domestic forex market became more sensitive to endogenous factors. Finally, we presented critical policy implications and some suggestions for future studies.

PENGARUH NON PERFORMING LOAN (NPL) DAN PERPUTARAN KAS TERHADAP LIKUIDITAS KOPERASI SIMPAN PINJAM SE-KECAMATAN SUKAWATI TAHUN 2017-2020

Liquidity is a ratio that describes the company's ability to meet its short-term obligations. Companies with good liquidity ratios have good liquidity management capabilities. This research was conducted to determine the effect of Non Performing Loans (NPL) and Cash Turnover on Liquidity. The sample in this study is the financial statements of 14 cooperatives in Sukawati District for the period 2017-2020. The data analysis technique used multiple linear regression and hypothesis testing using t-test to test the effect of Non-Performing Loans (NPL) and Cash Turnover on Liquidity. The results of the study stated that there was a negative and significant relationship between Non Performing Loans (NPL) on liquidity, while cash turnover had a significant positive effect on liquidity. Simultaneously Non-Performing Loans (NPL) and cash turnover have an effect on liquidity. The coefficient of determination test shows that 26.1% of the dependent variable is explained by the independent variable, while the remaining 73.9% is explained by other factors or variables.

Polypropylene-secondary alkane sulfonate micro/nanofibrous fabrics with aligned fibers for enhanced anisotropic wetting performances

Micro/nanofibrous fabrics with anisotropic wetting behaviors for personal hygiene products are highly desired due to their efficient application in liquid management. However, these fabrics remain a challenge to fabricate using scalable and green methods. To address this issues, polypropylene-secondary alkane sulfonate (PP-SAS) fabrics with aligned micro-nanofibers were prepared by blending SAS with PP via a large-scale melt-blowing process. The obtained samples had a fluffy micro-nanofibrous structure (94.9 % porosity and fiber diameter ranged from 0.6 − 5.8 μm) and were hydrophilic (31° water contact angle), which led to excellent water wetting performance. Moreover, the aspect ratio of the water-wetting area significantly increased from 1.5 to 2.41 (an increase of 63.9 %) by aligning the fiber distribution, which was due to the different speeds of the collectors. Additionally, the significant difference between the strengths of the fabrics in the stretching and cross directions also implied their anisotropic performance. The results demonstrated that the PP-SAS micro/nanofibrous fabrics developed in this study would be exceptional candidates in personal hygiene areas where fast water anisotropic transportation, low cost, and high safety are required.

Banks, Liquidity Management, and Monetary Policy

We develop a tractable model of banks' liquidity management with an over‐the‐counter interbank market to study the credit channel of monetary policy. Deposits circulate randomly across banks and must be settled with reserves. We show how monetary policy affects the banking system by altering the trade‐off between profiting from lending and incurring greater liquidity risk. We present two applications of the theory, one involving the connection between the implementation of monetary policy and the pass‐through to lending rates, and another considering a quantitative decomposition behind the collapse in bank lending during the 2008 financial crisis. Our analysis underscores the importance of liquidity frictions and the functioning of interbank markets for the conduct of monetary policy.

The impact of COVID-19 on liquidity management in small and medium-sized trade businesses

Purpose: The aim of this paper is to examine empirically the relationship between liquidity management and profitability of Croatian small and medium enterprises in trade and to provide empirical evidence of the effects of liquidity management on the level of profitability during the COVID-19 crisis. Methodology: The analysis began with descriptive statistics, where the authors observed the following variables: ROA, current liquidity, accelerated liquidity, immediate liquidity and employment. The collected data analyzed descriptive statistics and compared the Wilcoxon signed-rank test. The authors made six regression models and performed regression diagnostics for all models. The problem of heteroscedasticity examined the Breusch-Pagan test, the normality of relation errors examined the Jarque-Bera test, while multi-collinearity examined the variance inflation factor (VIF). Results: All six models confirmed a statistically significant and positive impact of liquidity on the level of profitability in both years, which means that the increase in liquidity will result in an increase in the level of profitability of the observed companies. Control variables of company size and trade category did not prove statistically significant. Conclusion: Scientific contribution is the development of a model for the analysis of the impact of liquidity on the profitability for small and medium enterprises in trade. The model is also applicable to similar transition and post-transition economies, especially to those in the region that have similar economic development as it will help economic policy makers and corporate managers understand the importance of the impact of liquidity on profitability levels.

Liquidity Management of Cement Companies in India: A Comparative Study of High, Medium and Low Turnover Companies

Liquidity management refers to a set of processes, strategies and supporting mechanisms that ensure a firm’s ability to access cash to meet its short-term financial obligations. The present paper focuses on twelve major cement producing companies selected on the basis of turnover in FY 2019-20 and divided into three groups i.e. high turnover (turnover > ₹ 10,000 crore), medium turnover (turnover between ₹ 5,000 crore to ₹ 10,000 crore) and low turnover (turnover < ₹ 5,000 crore). For the purpose of analysis and interpretation, current ratio (CR) has been considered and appropriate statistical measures like mean, standard deviation and coefficient of variation have been computed. For testing hypotheses and making conclusions, Single Factor ANOVA is applied. The study finds a significant difference in the current ratio among the sample groups under study. The period of study remained ten years i.e. from 2010-11 to 2019-20.

Liquidity Management and Profitability: Evidence from Small and Medium-sized Enterprises (SMEs) in China

Liquidity Management and Profitability: Evidence from Small and Medium-sized Enterprises (SMEs) in China

АНАЛІЗ РОЗРИВІВ ЛІКВІДНОСТІ ЯК МЕТОД ЗБАЛАНСОВАНОГО УПРАВЛІННЯ АКТИВАМИ ТА ПАСИВАМИ (НА ПРИКЛАДІ АТ «КБ «ПРИВАТБАНК»)

In the article it was explored the concept of asset and liability management. It was found that this process has a direct impact on the structure and liquidity of the bank's balance sheet, as well as sensitivity to fluctuations in interest rates on its financial items. Liquidity management is a priority in the bank's asset and liability management. It was justified that the best method of assessing the risk of liquidity loss is to analyze the gap in the maturity of financial requirements and liabilities. The basis of liquidity management is the concept of cash flow compliance, aimed at ensuring that based on the GAP-analysis of incoming cash flows are brought in line with the outgoing flows. It was revealed that an important system-forming institution of the domestic banking sphere is JSC CB «PrivatBank». From the point of view of asset and liability management, the main sources of mobilization of financial resources of this bank were be identified. It was found that due to the active work of JSC CB «PrivatBank» in the Ukrainian financial market, the greatest danger is the probability of liquidity risk. The emergence of this risk means that the institution may suffer losses, additional expenses or loss of income due to its inability to provide financing to increase assets and/or fulfillment of its liabilities in due time. In this context the GAP-analysis was performed for JSC CB «PrivatBank». For the purpose of liquidity gap analysis there were selected only financial assets and liabilities of the bank. All these funds were divided into following groups: on demand and up to 1 month, from 1 to 3 months, from 3 to 12 months, more than 12 months. It was made an assessment of the dynamics of changes in liquidity gaps in JSC CB «PrivatBank» in terms of maturity, as well as the total liquidity gap in 2016-2020. The necessity of developing measures to maintain liquidity in case of adverse events was substantiated. There were offered variants of scenarios of response to realization of bank liquidity risks. Emphasis was placed on the importance of finding alternative sources of funding that increase the bank's ability to withstand stressful situations and liquidity crises.

LIQUIDITY MANAGEMENT AND FIRM VALUE OF QUOTED MANUFACTURING COMPANIES IN NIGERIA

This study was conducted to examine the influence of liquidity management on firm value of quoted manufacturing companies in Nigeria. This was premised on the fact that continuous existence of quoted manufacturing companies is guaranteed by the level of improvement in firm value, which may depend upon the level of liquidity management technique employed by managers. Have these techniques of liquidity management adopted by managers of quoted manufacturing companies in Nigeria influence firm value? Ex-post facto research design was employed for the study. Fortytwo (42) quoted companies were sampled out off a population of fifty-six (56) quoted listed on the floor of the Nigerian Stock Exchange (NSE) as at December 31, 2019. The independent variables for liquidity management were measured by current ratio (CRR), Quick Ratio (QR), Cash Ratio (CR) and Net Working Capital Ratio (NWCR), and Firm Value (AV) was the dependent variable panel date was sourced from the published financial reports of the sampled companies and analysed using Fixed effect regression technique. Results revealed that CRR, QR and NWCR had positive and significance influence on FV, CR had a positive and insignificant influence. It was recommended that managers of quoted companies should invest continuously on current assets for the purpose of raising liquidity and profitability which impacts on firm value.

Bank complexity, governance, and risk

Bank holding companies (BHCs) can be complex organizations, conducting multiple lines of business through many distinct legal entities and across a range of geographies. While such complexity raises the costs of bank resolution when organizations fail, the effect of complexity on BHCs’ broader risk profiles is less well understood. Business, geographic, and organizational complexity can engender explicit tradeoffs between the agency problems that increase risk and the diversification, liquidity management, and synergy improvements that reduce risk. The balance of outcomes may depend on the strength of bank governance. We test these conjectures using data on large U.S. BHCs for the 1996–2018 period. Business, geographic, and organizational complexity provide diversification benefits and some reduced idiosyncratic and liquidity risk exposure. All forms of complexity tend to increase BHC systemic risks. A regulatory tightening focused on complexity reduced organizational complexity, while also curtailing systemic risk but increasing liquidity risk.

Liquid Co-Illiquidity Management

Liquid Co-Illiquidity Management

Stock Liquidity and Accruals-based Earnings Management: The Three Views

Stock Liquidity and Accruals-based Earnings Management: The Three Views