Short-term Borrowing Research Articles

Social responsibility and corporate borrowing

We study the impact of social capital, measured by corporate social responsibility (CSR) performance, on corporate borrowing. Using a sample of 120,204 bank loan applications of China's listed firms, we find that an increase in CSR performance increases the loan amounts of approved loans, although it does not alter the likelihood of loan approval. Using aggregate loans at the firm level, we show that CSR performance positively impacts firms' long-term borrowing from banks but does not affect their short-term borrowing. The economic magnitude of the positive effect is large at both the loan and firm levels. We attribute this positive relationship to reduced information asymmetry and improved risk mitigation. Surprisingly, we find that banks do not discipline their borrowers' CSR investments through the lending relationship. Specifically, when borrowers exhibit high CSR performance and borrow from banks with high CSR performance, further increases in CSR no longer correlate with larger loan amounts. Our findings suggest that China's state-led green credit policies should be more market-oriented.

Why does uncovered interest parity fail empirically?

The Uncovered Interest Parity theory, predicated on perfect capital mobility and a floating exchange rate regime, faces challenges in real-world contexts marked by capital restrictions and diverse exchange rate regimes. This research investigates the validity of the UIP hypothesis in selected OECD countries, considering the role of capital control and de facto exchange rate regimes. By analyzing annual and monthly data, including immediate rates, short-term borrowing rates, and 10-year government bond rate differentials, several panel estimation techniques and alternative empirical models are employed. The results are robust to sub-sample analyses, alternative specifications of the empirical model, and different estimation methods. The study provides evidence supporting the UIP, particularly for immediate and short-term interest rates. The empirical examination underscores the necessity of accounting for the de facto floating exchange rate regime and capital flow restrictions when testing the UIP model. Consequently, the UIP hypothesis moves beyond being a theoretical fallacy and emerges as empirically verifiable, holding significant implications for policymakers and advancing the understanding of international finance.

Heterogenous Panel Modeling on Foreign Direct Investments in E7 Countries

With the spread of free economy conditions, the increase in the international mobility of capital has led to an increase in the number of economies that want to attract capital and the opportunities it will provide. In addition to this, capital owners have started to use free movement opportunities in order to maximize their own benefits. In this context, the factors affecting foreign direct investments including long-term capital flows have been the subject of many empirical studies. In this study which is carried out within the scope of the annual data of E7 economies for the period of 1992-2021, it is aimed to reveal the relationships between net foreign direct investment inflows and unemployment, liberal democracy, public expenditures, foreign direct investment outflows and short-term borrowing. In the study, in which the heterogeneous panel data method based on seemingly unrelated regression analysis was used, it was determined that the realizations under the influence of the selected independent variables differed by countries, but it was found that all the variables included in the analysis had a decisive role on foreign direct investment inflows.

The Influence of Treasury Single Account Implementation on Public Sector Performance: A Case Study of Selected Parastatals in South East Nigeria (2010-2019)

This study delved into the effect of Treasury Single Account (TSA) on public sector performance in selected parastatals in South East Nigeria (2010-2019). The broad objective of this study was to ascertain the effect of Treasury Single Account (TSA) on public sector performance in selected parastatals in South East Nigeria. Consequently, four research questions and four hypotheses were formulated to guide the study. Survey design was adopted for the study. Area of the study is South East Nigeria, population of the study was 1,548 staff drawn from Boards of Internal Revenues (BIRs) of the five States in South East. Stratified random sampling was used to derive 713 respondents for the study. Instrument for data collection was self-structured questionnaire. Mean and standard deviation was used to answer research questions while ANOVA and Z-test statistic was used to analyze hypotheses. The result based on empirical analysis revealed that treasury single account had positive effect on fraud detection in Parastatals in South East Nigeria, treasury single account had positive effect on revenue mobilization in Parastatals in South East Nigeria, treasury single account had positive effect on blockage of financial leakages in Parastatals in South East Nigeria and treasury single account had positive effect on financial savings in Parastatals in South East Nigeria. Thus, the study concluded that fraud detection, revenue mobilization, financial leakages and financial savings have been affected in Parastatals in South East Nigeria as result of Treasury single account (TSA). Based on the findings, the following recommendations among others were proffered: Government should ensure timely release of operational funds to encourage MDAs to support the TSA Policy. This can be achieved through the use of treasury bills (T-bills) or other short-term borrowing instruments aimed at offsetting the impact of TSA implementation on government cash flows and there should be full implementation of TSA in all states ministries, Departments and Agencies (MDAs). Partial implementation in many states as was observed by the researcher during field work should be discouraged. The gains of TSA cannot be overemphasized. Keywords: Treasury Single Account, Accountability, Public Sector, Revenue, Savings, Parastatatal.

The Effect of Global Monetary Policy Changes on the Financial Strategy of International Companies

In the interconnected global economy, the financial strategies of international corporations play a crucial role in navigating the dynamic landscape shaped by various factors, including monetary policies set by central banks worldwide. This narrative explores the intricate interplay between global monetary policy changes and the financial strategies of multinational corporations, investigating how shifts in these policies reverberate across borders, impacting corporate decision-making, risk management, and performance. Over recent decades, significant transformations in monetary policy frameworks have occurred, driven by evolving economic paradigms, financial crises, and geopolitical dynamics. Central banks have deployed a range of tools, from conventional inflation targeting to unconventional measures like quantitative easing, to stabilize economies and stimulate growth. However, the effectiveness and unintended consequences of these policies transcend domestic boundaries, permeating the international financial system and shaping the strategic imperatives of multinational corporations. The impact of global monetary policy changes on international companies' financial strategies is substantial. U.S. monetary policy shocks notably affect foreign firms, especially those with extensive global production linkages and financial constraints. Financial globalization has made domestic financial conditions more vulnerable to external shocks, reinforcing the case for price stability as an optimal monetary rule. The volatility of foreign currency exchange rates significantly affects international budgeting, while multinationals with foreign involvement exhibit lower leverage ratios and rely more on short-term borrowing. One primary channel through which global monetary policy changes influence international companies is by altering financing costs and access to capital. Changes in interest rates and liquidity conditions affect borrowing costs for firms operating across borders, impacting investment decisions, capital allocation, and capital structure optimization. Additionally, these changes induce currency fluctuations and volatility, necessitating robust currency risk management strategies to safeguard revenues and mitigate exchange rate exposure. Furthermore, global monetary policy changes affect asset prices, financial markets, and investor sentiment, shaping the risk-return dynamics faced by international companies. Expansive monetary policies often fuel asset price inflation and influence investment strategies, while abrupt policy shifts can trigger market dislocations and liquidity constraints. Beyond financial markets, monetary policy changes influence macroeconomic variables, such as economic growth, inflation, and trade patterns, shaping international companies' operating environments and strategic decisions. In conclusion, the interconnectedness of global financial markets accentuates the importance of agility, flexibility, and strategic foresight for multinational corporations in navigating the impact of monetary policy changes on their financial strategies and overall performance.

Disentangling the supply and announcement effects of open market operations

Central banks use open market operations (OMOs) to adjust the liquidity available to the financial system to maintain the short-term borrowing rate within the desired target range. Using the conditional event study methodology to decompose the impact of OMOs into supply and announcement effects, this paper finds that when OMO announcements are unexpected, the decrease in the lending rate as a result of the higher supply is significantly moderated by the announcement effect. The results highlight that central banks communicate not just through signals of their desired policy stance, but also through their announcements of operations that implement the stance.

The Influence of Supply Chain Financing on Enterprise Operation Efficiency and Competitiveness

Supply chain financing has become a vital tool for businesses to enhance their operational efficiency and competitiveness in today's dynamic market environment. This research aims to explore the impact of supply chain financing on business efficiency and competitiveness. The study examines how supply chain financing can improve cash flow management, optimize inventory management, and foster collaboration among supply chain partners. By providing timely access to working capital, supply chain financing helps businesses optimize their cash flow, reduce receivables collection time, and minimize the need for costly short-term borrowing. This enhances financial stability and enables companies to meet their financial obligations promptly. Furthermore, supply chain financing offers flexible financing options, such as inventory financing and vendor-managed inventory programs, which enable companies to optimize inventory levels, reduce stockouts, and lower holding costs. This allows businesses to respond quickly to market demands, reduce lead times, and improve overall supply chain efficiency.In addition, supply chain financing platforms facilitate the sharing of financial information and streamline payment processes, enhancing transparency and trust among supply chain partners. This fosters better coordination of production and delivery schedules, reduces supply chain disruptions, and enhances the overall reliability and efficiency of the supply chain.The research methodology includes a comprehensive review of existing literature, case studies, and interviews with industry experts to gather empirical evidence on the impact of supply chain financing on business efficiency and competitiveness. The findings of this research will contribute to a better understanding of the benefits and challenges of supply chain financing and provide insights for businesses seeking to enhance their operational efficiency and competitiveness. Overall, the research highlights the significant role of supply chain financing in improving business efficiency and competitiveness. By leveraging supply chain financing, companies can optimize cash flow, streamline inventory management, and foster collaboration among supply chain partners. This, in turn, enables businesses to respond effectively to market dynamics, gain a competitive edge, and achieve sustainable growth in today's rapidly changing business landscape.

Debt Financing and Operational Efficiency of Companies listed at Nairobi Stock Exchange, Kenya

Background: As companies evolve, they confront a myriad of challenges, opportunities, and risks, demanding a laser focus on financial strategies. Within this landscape, the intertwined concepts of debt financing and operational efficiency emerge as critical determinants of a firm's performance and longevity. Debt financing sources presents an intricate landscape in which companies make their financial decisions. However, the existing literature often treats debt financing as a homogenous entity, lacking the granularity required to discern how the specific composition of debt, including the reliance on trade credit versus traditional short-term and long-term bank borrowings, might influence operational efficiency. Thus, this study aimed at identifying the effect of debt financing composition on operational efficiency of companies listed in NSE. Methods: The research focused on examining the link between debt financing structures and operational efficiency in 50 firms listed on the Nairobi Securities Exchange (NSE). The study collected panel data ranging between 2015 and 2022. A positivist research philosophy was employed, utilizing quantitative analysis techniques, specifically descriptive statistical analysis and random effects regression model. Findings: The regression results of the random effects model reveal the relationship between debt financing constructs and operational efficiency. The overall R-squared value for the model is 0.176, suggesting that around 17.6% of the variation in operational efficiency can be explained by the debt financing sub-variables. Furthermore, the model’s goodness of fit is assessed through the Wald chi-square test (χ² =72.61, p = 0.000), confirming its statistical significance. The coefficient for the independent variables trade credit, short-term borrowings, and long-term borrowings are (β = 0.331, p = 0.002), (β = 0.642, p = 0.001), and (β = 0.349, p = 0.001), respectively. The p-values are less than 0.05, indicating that the effects of trade credit, short-term borrowings, and long-term borrowings on the operational efficiency of firms listed at the NSE are statistically significant at the 5% level. Conclusion and Implications: The study concludes that debt financing comprising of trade credit, short-term borrowing and long-term borrowing have beneficial effects on operational efficiency. While all three sub-variables of debt financing contribute to enhanced operational efficiency, their application in corporate financing practices varies, with long-term borrowing being a common choice for funding total assets. In light of these findings, company managers should recognize debt financing as a strategic tool for improving operational efficiency. This recognition should be accompanied by a careful and thoughtful approach to utilizing the three components of debt: trade credit, short-term borrowing, and long-term borrowing.

Covid-19 Pandemic and Capital Structure: Evidence from West Africa

The question of whether the Covid-19 pandemic is a predictor of firms’ capital structure has remained unanswered following limited empirical studies. The financial structure of every business is its lifeblood which is the most important decision-making at any stage of the business’s operation. This study investigated the effect of covid-19 on the capital structure of non-financial firms listed on the Ghana stock exchange (GSE). The study focused on long-term debt, short-term debt and total debt ratios as a measure of capital structure. The study adopted the ex-post facto research design, the population consisted of 23 listed non-financial firms out of which 21 were sampled. Data was sourced from audited annual financial reports of the selected companies. Panel regression and ANOVA were used to analyze the data. The findings of the study revealed that covid-19 pandemic showed an insignificant effect on capital structure measured as long-term debt. This implies that the pandemic did not cause significant volatility to the long-term debt of non-financial firms in Ghana within the period of the study. Furthermore, the covid-19 pandemic showed no significant effect on short-term debt. This indicates that short-term borrowings for non-financial firms listed on GSE were not significantly affected by the covid-19 pandemic. The findings of the study further revealed that the covid-19 pandemic does not have a significant effect on the total debt of listed non-financial companies in Ghana. The study recommends that the capital structure policy of non-financial firms listed on the Ghana Stock Exchange should be maintained. This is because the study revealed that the severity of the covid-19 pandemic on business operations did not significantly affect the capital structure of the firms as measured by long-term debt, short-term and total debt.

A study on the management of big data technology in financial decision-making of enterprise cloud accounting

Abstract Exploring the effectiveness of the application of big data technology in financial decision management of enterprise cloud accounting is to help better enterprises achieve economic growth and sustainable development. In this paper, a decision tree algorithm based on information gain and attribute dependency is jointly analyzed under big data technology using attribute dependency of rough set theory, attribute parsimony algorithm, and information gain of ID3 algorithm. The analysis of enterprise cloud accounting and financial decision-making is explained, including the process and content. The data analysis of financial decision management of WK Group, BL Real Estate, and LD Holdings is carried out using a decision tree algorithm. In terms of financing structure, debt financing mainly consists of long-term borrowings, short-term borrowings, and bonds payable, accounting for 66.06%, 21.18%, and 12.76%, respectively. In terms of gearing ratio, the average ratios of WK Group, BL Real Estate, and LD Holdings are 76.6%, 81.54%, and 80.05%, respectively. It shows that the decision tree algorithm based on information gain and attribute dependency can effectively perform corporate financial decision management analysis and visualize the company’s sustainable development strategy through the data.

Inventory as a Financial Instrument: Evidence from China’s Metal Industries

Classic inventory theory suggests that inventory plays a vital role in matching demand and supply. This paper provides both country- and firm-level evidence that inventory can be used as a financial instrument to take advantage of arbitrage opportunities in financial markets with limited capital mobility. Using data from China customs’ metal imports and firm-level inventory from metal processing industries, we show that firms can utilize the inventory of an imported product to carry lower cost capital into a country with strict capital controls and, thus, gain higher financial returns. Specifically, at the country level, we find that the level of imported metal commodities is positively associated with the expected returns from financial arbitrage. At the firm level, we find that a higher expected return from financial arbitrage will incentivize a firm to increase its inventory level through short-term borrowing. In addition, our evidence supports the notion that firms with higher liquidation value, larger size, and higher sales growth (i.e., firms with higher borrowing capacity) may be more active in using inventory as an instrument to seek higher financial gains. We also utilize a unique regulatory policy shock as a quasi-natural experiment to enhance the causality interpretation of our empirical findings. This paper was accepted by Vishal Gaur, operations management. Funding: This work was supported in part by the National Natural Science Foundation of China [Grant 72201230] and the Research Grants Council of Hong Kong, University Grants Committee [Grant 14504621]. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4873 .

THE MAIN FACTORS SHAPING THE STATE'S DEBT POLICY AND DEBT STRATEGY IN THE REPUBLIC OF AZERBAIJAN

Public debt is the total amount covering the budget deficit in a certain period of time. The correct management of the debt structure means the set of operations carried out until the time when the debt is zeroed by issuing the debt and paying off the principal debt and interest thereafter. In this regard, in each state, a special institution responsible for the mentioned issues is involved. The purpose of debt strategy management is to ensure the achievement of the main economic and social goals by making certain adjustments or various additions to the amount, composition and repayment period of debts. From this point of view, debt management is closely related to both fiscal (budget-tax) and monetary policy of the state. Adjustments in the amount of debt, i.e. reducing or increasing the amount of the debt, regulating the debt in terms of duration is one of the important issues of debt management. It should be noted that these operations include adjustments to the amount and composition of the debt and a number of debt policy instruments that will ensure the achievement of certain economic goals. In addition, another goal of managing debt strategies is to use the resources obtained through borrowing in the most beneficial way for the stability and development of the national economy and to get rid of the debt burden at the lowest cost. This issue is one of the most important and most successful elements in the debt strategy. Public debt is the total value covering the budget deficit in a certain period of time. In addition, another goal of managing debt strategies is to use the resources obtained through borrowing in the most beneficial way for the stability and development of the national economy and to get rid of the debt burden at the lowest cost. This issue is one of the most important and most successful elements in the debt strategy. The most important factors that require attention in the debt strategy are: - Selection of the minimum debt burden for the State; - Sale of bonds and bills of any amount or as needed; - Adjustment of the borrowing amount and conditions to economic requirements; - Debt reduction as appropriate opportunities arise. Also, the main principle of strategic debt management is that the amount and structure of the public debt should be in accordance with the requirements of the economic situation and the main goals. At the same time, it should be taken into account that it is natural for the state to try to reduce its debt burden when appropriate opportunities arise. However, the policy of alleviating the debt burden begins first of all with the logical and correct selection of the borrowing time and other necessary measures. For example, during recessions when interest rates are low, it is more appropriate for the government to borrow. Because in general, the interest burden of the debt attracted by the state will be less. On the other hand, if there is a high interest payment obligation in the current period and if interest rates are likely to decrease in the future, it is useful to wait for the market interest to decrease through short-term borrowings. In the research paper “The main factors shaping the state's debt policy and debt strategy in the Republic of Azerbaijan” was talked about the debt policy, which is of special importance for any state and plays an indispensable role in its financial system. Nowadays, due to the fact that it plays an important role in the economic development of the country and the regulation of debt problems, the correct processing of the public debt has been reflected. Otherwise, an improperly prepared debt policy that does not take into account modern realities can lead to negative consequences and lead to unpleasant situations. From this point of view, the correct implementation of the policy related to the topic we are studying has been evaluated as one of the most relevant issues. In the article, the goals put forward in the strategy for public debt in the country are described. Based on the debt policy carried out in our country, it was brought to attention that the state has a wide and positive experience, both in terms of benefiting from the debt system and in terms of paying off the public debt. Recently, the dynamics of internal, general and external public debt have been given and statistical indicators have been shown, emphasizing the great importance of replacing foreign debt with domestic debt as much as possible. At the end of the article, it was mentioned that the main goal of the debt strategy is the gradual reduction of the public debt. Keywords: debt strategy, financial system, debt system, economic development, debt dynamics.

Effect of subprime crisis on financing decisions and capital structure of Indian firms: a pre- and post- crisis study using system GMM methodology

PurposeThe subprime crisis (SPC) (2007–2008) has severely affected the economies across the globe. The Indian economy was also troubled because the SPC led to a sharp reduction in foreign trade and investment, a rise in the exchange rate volatility and disproportionate foreign-currency reserves. The present paper analyzes the financing pattern of Indian listed companies during the SPC. This study aims to ascertain the impacts of the SPC-2008 on the long-term and short-term financing decisions of Indian listed companies using novel data set and appropriate robust methodology.Design/methodology/approachThe study uses fixed effect model autoregressive of order 1 (FEM AR (1)) and system generalised method of moments (GMM) methodology on a sample data of 1,032 Indian non-financial listed companies on the Bombay Stock Exchange (BSE) for the period 1999 to 2019 to analyze the financing pattern during the crisis.FindingsThe study finds that the Indian firms opted for de-leveraging, shortening the maturity of debt and short-term borrowing. This significant decline in the leverage and maturity of debt indicates that the companies in India generally followed the “rat race” model of the financing mix in the crisis. After the crisis, the firms have re-leveraged and expanded the maturity of debt up to 90%. This considerable expansion in leverage and maturity implies that the Indian firms are exposed to the “rollover risk.” This re-leverage risk is asymmetrically distributed for manufacturing and services firms. Manufacturing firms are found to be more exposed to this risk. Furthermore, tangibility, free cash flows and the liquidity available within the firms are the compelling elements of the financing decision during the crisis.Research limitations/implicationsThe study has not included the private firms and unorganized sectors in India. Moreover, the study has not analyzed disasters such as the Asian liquidity crisis, the information technology (IT) bubble crisis, the euro bond crisis and coronavirus disease 2019 (COVID-19) pandemic.Practical implicationsThe study finds that Indian firms are exposed to higher risk during the financial crisis and this risk is further aggravated by the rollover risk. Therefore, investors and creditors should consider these additional risks in the financial decisions and take more precautions. The study suggests that the regulators should make necessary adjustments in lending policy, corporate restructuring and tax policy to deal with the menace of a financial crisis.Social implicationsIndian firms should avoid following the rate race financing model.Originality/valueThis study aims to ascertain the impacts of the SPC-2008 on the long-term and short-term financing decisions of Indian listed companies using novel data set and appropriate robust methodology.

The Ecosystem of FinTech Companies in India

The paper examines the present fintech ecosystem in India in general and assesses the efficiency of fintech firms operating in lending and payment verticals. Twelve companies were randomly selected from the top-rated fintech companies in India having an operational track record of four years and more. Financial data of these firms for three years (from 2017-2020) was used for evaluating the efficiency by applying the DEA model. The results indicate that 42 percent of the companies were unable to achieve profitability. The interest obligation (36%) on short-term borrowings which constitute 68 percent of current liabilities is the major contributor to the operating cost of lending firms. Companies from payment verticals are less homogeneous in their component-wise distribution of operating cost. The current ratio of two DMUs is excessively higher while it is below the benchmark for the other six DMUs. To make the fintech a revenue generating model by scaling up their operation, this study suggests the business areas where fintech firms could collaborate with traditional financial institutions.

The Empirical Study of Interest Rate Pass-Through in Cambodia: An Error Correction Model

ABSTRACT The error correction model was used to explore the influence of domestic and international interest rates, proxied by the 6-Month and 1-Year SIBOR, on the borrowing interest rate of bank. The primary goal of this study was to determine the pass through from the predicted borrowing rate to the lending rate. The empirical findings of this study confirmed the existence of a long-run relationship between the borrowing rate and its explanatory variables, as evidenced by the two-step co-integration test. Domestic and foreign interest rates have a substantial long-run influence on the borrowing rate. Short-term borrowing rate changes were also impacted by changes in market interest rates and SIBOR rates. The predicted borrowing rate from co-integration equation had a positive significant impact on the lending rate claimed that there had a pass through from foreign to domestic lending rate. Keywords: ECM, Interest rate pass through, Borrowing rate, Market Rate, SIBOR.

The Moderating Effect of External Financing on the Relationship Between Innovation Input and Enterprise Performance Based on the Moderating Effect Model of Two Interactions

This article takes China's high-tech companies from 2010 to 2019 as a sample to explore the correlation between innovation investment and corporate performance, and the moderating effect of external financing on innovation investment and corporate performance. The main research conclusions are as follows: (1) Innovation investment has a positive impact on corporate performance. (2) Equity financing has a positive regulatory effect on innovation input and corporate performance. (3) Debt financing has a negative regulatory effect on innovation input and corporate performance. The negative adjustment effects of debt financing from strong to weak are: bond financing, long-term borrowing, short-term borrowing, and commercial credit.

DETERMINANTS OF BANK CAPITAL STRUCTURE: EVIDENCE FROM INDONESIA

Abstract –The capital structure in banking has become discussed due to the competition with the fintech and bank digital and debate about the efficiency of its choices. The purpose of this paper is to investigate the dynamics that go into determining a bank's capital structure in Indonesia. The capital structure of Indonesian banks is examined using a panel regression model. Profitability, corporate tax, growth, collateral, and bank size all influence banks' financing or capital structure decisions, according to the findings of this study. The study's most important result is that debts finance more than 87 percent of banks' assets, with short-term obligations accounting for more than three-quarters of bank capital. This emphasizes the importance of short-term borrowing in Indonesian bank funding over long-term debts. The fundamental contribution of this article is the identification of factors that influence the capital structure of Indonesian banks.
 Keywords: Capital Structure Determinants; Banks; Trade-Off Theory; Pecking Order Theory

KAZANÇ YÖNETİMİ İLE LİKİTİDE ORANLARI ARASINDAKİ İLİŞKİ:BIST 30 UYGULAMASI

Investors who will invest in companies make investment decisions by looking at the financial statements of the companies. However, some companies mislead the investors who will make investments by showing the information required in these tables differently and increase the demand for stocks. These events led to earnings management and investors have focused on earning management. In this study we aim to determine the relationship between liquidity ratios. Since the financial structures of the banking and finance sectors in the BIST 30 index are different from the financial structures of production and trade enterprises, the banking and finance sector was excluded from the scope and the analysis was carried out with a total of 16 enterprises. The data obtained within the scope of the research were obtained from the Public Disclosure Platform (KAP). In determining the earnings management of the companies included in the analysis, the earnings management formulation calculated over cash flows was used. In terms of liquidity ratios showing short-term borrowing ratios, data on current ratio, liquidity (acid test ratio) and cash ratios are taken as basis. The linear regression analysis method was used to determine the relationship between the earnings management practices of the enterprises and the liquidity ratios. While analyzing the data, statistical package programs SPSS 22 and STATA 16 were used. According to the results obtained from the research, it has been observed that there is a positive relationship between earnings management and current ratio at the 1% significance level, and a negative relationship between earnings management and cash ratio. It has been determined that there is a negative and 5% significant relationship between the liquidity ratio and earnings management.

Regulatory Reforms Affecting the Performance of Banking Industry in Kenya

Regulations and guidelines issued by the Central Bank of Kenya subject banks to certain requirements, restrictions and guidelines. This regulatory structure creates transparency between banking institutions and the individuals and corporations with whom they conduct business, among other things. The special role that banks play in the economic system implies that banks should be regulated and supervised not only to protect investors and consumers but also to ensure systemic stability. More specifically, bank regulations exist for safeguarding the industry against systemic risk, protecting consumers from excessive prices or opportunistic behaviour and finally to achieve some social objectives, including stability. The research gap was based on the observation that there exists conflicting evidence of the effect of regulations on the bank financial performance.  For many years, the banks have defied all efforts to lower the prohibitive interest rates and destroyed many businesses while they earned staggering profits, even in the worst of our economic times. After the 2008 global financial crises, many countries moved to limit the self-regulation and market liberalisation of the financial sector to protect consumers. The study was based on the four objectives: to investigate the effect of capital requirement /liquidity on banks profitability; to establish effect of credit and interest rate on the banks profitability; to examine the effect of reserve requirement on the banks performance and lastly to determine the effect of financial reporting on banks profitability. The theories that informed the study included agency theory, economic theory and liquidity theory. The paper used a qualitative research design where journals, books and publications related to the research area were reviewed. The paper used content analysis as its analytical framework. The study found capital requirement may not explain the financial performance due to the fact that the total asset increases more than the equity of the commercial banks and this can lead to the to the low rate of profitability of the commercial banks. It was established that liquidity ratio does not at all explain financial performance of commercial Banks in Kenya. The studies revealed an increase of net loans compared to the short-term borrowing. Higher figures denote lower liquidity. The negative relationship between financial reporting and disclosures and financial performance is most likely to have been resulted from the increase of banks put under receivership. The most important minimum requirement in banking regulation is maintaining minimum capital ratios. There is an association between regulatory reforms and bank performance or profitability. Keywords: Regulatory Reforms, Capital Base, Return on Assets, Interest Rates, Capital Flows, Banks’ Profitability

Some Financial Aspects of the Corporate Groups that Operate in Food Distribution and Specialized Retail in the COVID-19 Pandemic. Outline of the Determined Financial Indicators of Jerónimo Martins, SGPS, S.A.

The paper regards the selected financial indicators of the Jerónimo Martins, SGPS, S.A.: LFL Growth, Employment, Net Sales and Services, EBITDA Mg, Long Term Borrowings, Short Term Borrowings, and Total Borrowings. The fundamental aim of the paper is the assessment of the selected financial indicators of the Jerónimo Martins, SGPS, S.A. in terms of the COVID-19 pandemic. The following research problems were put forward: What is the diversification of the financial indicators of the Jerónimo Martins, SGPS, S.A. as a Portuguese corporate group that operates in food distribution and specialized retail? Which of the researched financial aspects of the Jerónimo Martins, SGPS, S.A has the highest, the middle, and the lowest level in 2017-2021? In the theoretical part of the paper was depicted the portfolio of Jerónimo Martins, SGPS, S.A. The studies were carried out: documentation, statistical, comparative, and dynamics analysis. The results showed that the Jerónimo Martins, SGPS, S.A. in terms of the COVID-19 pandemic as a Portuguese corporate group that operates in food distribution and specialized retail had different tendencies. The inference process took place in a deductive way.