Capital Management Efficiency Research Articles

Measuring Impact of CAMELS Model on Financial Performance of Indian Commercial Banks

The purpose of this study is to examine the effects of CAMELS components on the financial performance of Indian commercial banks. To fulfill the objectives of the study,secondary data were collectedfor the fiscal year 2016 to 2021 from four public sector and four private sector banks based on their market capitalization. To analyse the data two econometric models are constructed using return on assets (ROA) and return on equity (ROE) as proxies for commercial banks’ financial performance as dependent variables and six CAMELS’s key indicators (capital adequacy, asset quality, management efficiency, earning quality, liquidity, and sensitivity to market risk)as independent variables. To determine the extent to which the independent variables have an effect on the dependent variable, panel ordinal least square regression with their assumption has been used. The findings of the study revealed that the financial performance of Indian banking sector as evaluated by ROA and ROE is statistically and significantly affected by capital adequacy, liquidity and sensitivity to market risk, whereas asset quality, managerial efficiency and earning quality is found to have insignificant impact on the financial performance of Indian commercial banks. In order to perform better, it is suggested that the commercial banks should focus more on the variables that have a substantial impact on their financial performance. Keywords: Random effect, ROA, ROE, liquidity, sensitivity to market risk, CAMELS.

STUDY OF RISK MANAGEMENT IN BANKING SECTOR

When it comes to the change of an economy, the function that financial institutions of a country perform is absolutely essential. The financial performance of a bank over the course of its history, as well as its capacity to manage risks such as market risk, credit risk, and liquidity risk, can be used to evaluate the progress that banking institutions have made. In the 1980s, the United States of America first implemented a supervisory framework model known as "CAMEL" in order to ascertain the overall state of the bank. It is possible for the model to serve as an efficient instrument for guidance and management, as it is able to forecast future risks that may have an impact on a bank. The purpose of this study is to evaluate the performance of three "public sector banks" and three "private sector banks" in India using the CAMEL methodology for a period of two years, specifically 2022 and 2023. A bank's financial strength is determined using the CAMEL model, which rates the banks from best to worst based on characteristics such as "capital adequacy, asset quality, management efficiency, earning, and liquidity." characteristics such as these are used to determine the strength of a bank. According to the findings of the study, the State Bank of India, the Central Bank of India, and the IDBI bank are the three banks that perform the best in terms of the CAMEL parameters among public sector banks. Similarly, according to the CAMEL composite index rating, the private sector banks in India that hold the top ranks are ICICI bank, Kotak Mahindra Bank, and HDFC bank. Key Word : CAMEL model evaluates financial health of banks using capital, asset quality, management, earnings, and liquidity.

Internal Determinant Of Firm’s Security Returns On Commercial Banks Listed On Nairobi Securities Exchange

The market for securities improves the exchange of shares of public firms. Companies utilize the essential market to float shares to the public through an initial public offer in return for financed capital. A firm’s performance concerning equities is a solid marker of how it is fairing financially and its contribution to the macroeconomy. The equity market records are a sign of the monetary solidness of the economy. Thus, the current study sought to establish the influence of market determinants on stock market returns among listed commercial banks at Nairobi Securities Exchange in Kenya. In Kenya, such risks as liquidity risks, non-performing loans (NPLs), and poor performance, among others, have been of significant concern for quite some time. Many studies have been carried out in Kenya concerning the stock market performance of the banking sector. While there may be several factors, such as favorable government policies, explaining these performances, there is a shortage of information on the justification of strategic bank factors influencing the financial performance of these banks. Hence, the research sought to address hypothesis around the influence of the determinants such as capital adequacy, asset quality, management efficiency and influence of liquidity on stock market returns among Commercial Banks listed in Nairobi Securities Exchange. The research adopted credit risk theory, liquidity risk theory transaction cost theory, capital structure theory and signaling hypothesis theory. The study also applied panel data analysis and survey design on 10-year primary and secondary data from from 2013 to 2022. The target population constituted 11 commercial banks listed on Nairobi Securities Exchange. The study used quantitative data sorted and analyzed using descriptive and inferential statistical techniques. The descriptive analysis results were in the form of mean, standard deviations, frequencies, and percentage forms. Tables, diagrams, and charts were adopted. From the study findings, asset quality and management efficiency ratios had a negative and significant association with stock market returns respectively. On the other hand, capital adequacy and liquidity had a positive and significant relationship with stock market returns respectively. Based on the study results, the study recommends that banks should balance asset quality and lending stringency due to its negative correlation with stock returns. Strengthening capital adequacy and maintaining optimal liquidity positively impact stock market returns. In addition, a focus on service quality and employee morale is recommended for indirect benefits on stock performance.

Оценка эффективности системы управления крупномасштабными строительными проектами в течение их жизненного цикла

The relevance of the study is due to the increasing importance of large-scale construction management processes throughout the full life cycle, as well as the system-technical nature of the problems that arise in this case. To determine the effectiveness of the management system, the principles of a systematic approach can be applied, in which the subject of economic activity is considered as a single whole with an ordered structure and relationships. It has been established that currently there are many problem-oriented models (simulation, optimization, expert) containing various quantitative indicators and methods for determining effectiveness aimed at finding economically feasible management solutions and providing for their subsequent practical implementation. However, a unified methodological understanding on the issues of evaluating the effectiveness of large-scale construction management has not yet been achieved. The purpose of the study is a methodological justification of a holistic approach to evaluating the effectiveness of a large-scale construction management system. As a working hypothesis, the assumption of a direct inextricable link between the integrity of the management system and the effectiveness of its functioning is accepted. The conceptual framework of the theory of integrity, mathematical statistics, and set theory is used within the framework of a systematic approach. As a result of the conducted research, an understanding of the effectiveness of large-scale construction management has been developed as the integrity of the solutions embedded in it, expressed by a set of any assessments that adequately express the need and possibility of implementing these solutions. The economic aspect of the systemic efficiency of capital management of a construction enterprise is investigated and a variant of its cost (monetary) assessment is proposed. The result obtained in the course of the study can be used as the basis for the development of a wide class of tasks for multi-criteria optimization of the operation of any large-scale construction management system throughout the full life cycle.

Assessment of working capital management efficiency – a two-stage slack-based measure of data envelopment analysis

PurposeThis study aims to assess the efficiency of managing working capital in 1,388 Indian manufacturing firms from 2008 to 2019 and investigate the effects of firm-specific and macro-level determinants on working capital management (WCM) efficiency.Design/methodology/approachThe current study accommodates a slack-based measure (SBM) in data envelopment analysis (DEA) for computing WCM efficiency. Further, we implement a panel data fixed-effects model that controls for heterogeneity across firms in determining the relationships of selected variables with WCM efficiency.FindingsThe results highlight that manufacturing firms operate at around 50 percent efficiency, which is constant throughout the study period. Furthermore, among the selected variables, yield, earnings, age, size, ability to create internal resources, interest rate and gross domestic product (GDP) significantly affect WCM efficiency.Originality/valueInstead of the traditional models used for assessing efficiency, the SBM-DEA model is unit-invariant and monotone for slacks, implying that it can handle zero and negative data, which overcomes the incapability of prior DEA models. Hence, this provides accurate efficiency scores for robust analysis. Additionally, this paper provides a holistic working capital model recognizing firm-specific and macro-level determinants for a more explicit estimation of the relationship between WCM efficiency and the selected determinants.

Working capital management and firm performance: A comparative analysis of developed and emerging economies

The literature on working capital management (WCM) provides mixed evidence on the effect of working capital on firm profitability and performance. We use firms from developed and emerging economies to explore how working capital and its components relate to firms' performance while controlling for firm-specific and macroeconomic factors. The findings show that the cash conversion cycle (CCC) is inversely related to firm performance in developed and emerging economies—however, there are differences in the CCC's components. While firms in developed economies exhibit higher firm performance with longer days' inventory on hand, firms in emerging economies have lower firm performance with longer days' inventory on hand, extended collection periods, and longer payable periods. Company-specific factors, such as firm size, growth, profitability, and leverage, influence the efficiency of WCM. We also find that country-specific variables such as gross domestic product (GDP), interest rate, and inflation have varying impacts on a firm's WCM.

Working Capital Management Aggressiveness and Its Performance: Evidence from Agro-Food Industry in Thailand

The primary objective of this research study was to empirically examine the association between the efficiency of working capital management (WCM), comprising measures such as the Cash Conversion Cycle (CCC), Efficiency Index (EI), Aggressiveness Index (AGGR), and Accounts Receivable Aggressiveness (ARAGGR), and the financial performance (FP) metrics, including Earnings on Assets (EOA) and Return on Assets (ROA). Additionally, this study aimed to compare the efficiency of WCM across various models of publicly listed companies operating in Thailand's Agro & Food Industry. The study utilized a dataset spanning a period of 11 years, from 2007 to 2018, encompassing a sample of 53 enterprises listed within the Agri-business and Food & Beverage sectors. The data was sourced from the SETSMART database, a reputable financial data repository. To investigate the relationship between WCM efficiency and financial performance, the study employed multiple regression analysis. The empirical findings from this research indicate that all the independent variables associated with WCM have a statistically significant impact on financial performance. Notably, the variable AGGR exhibited the most substantial influence on financial performance, as evidenced by its beta coefficient of 0.485. These findings suggest that a model incorporating a combination of performance metrics provides a more comprehensive explanation of the interplay between working capital management and financial performance.

МОДЕЛІ ТА МЕТОДИ УПРАВЛІННЯ ЗАЛУЧЕНИМ КАПІТАЛОМ НА ПІДПРИЄМСТВІ

Raised capital is a part of the enterprise's capital, which is formed at the expense of external sources, such as loans, credits, issuance of securities, etc. Raised capital, such as loans, bonds, shares or investments, is an important part of financing a business. It is an important tool for financing the company's activities, but at the same time it is associated with certain risks. Achieving effective management of this capital helps to ensure sustainable operation and growth of the enterprise, ensure financial stability and the ability to pay interest or repay loans on time. A business must determine the optimal mix of financing that meets its needs and constraints. Effective management of capital employed can help a company to be more competitive in the market, as it helps to influence the cost of capital and overall financial profitability. Factors affecting the capital structure include the organizational and legal form of the enterprise, industry specifics of operational activity, the size of the enterprise, the cost of capital, the freedom to choose sources of financing, the state of the capital market and the level of income taxation. Regular determination of capital management efficiency indicators is important for monitoring the current state of its structure. The important issues related to the effective use of loans and other forms of borrowed capital to achieve the company's financial goals are considered in the article. Debt management strategies and tools, optimization of debt service costs, as well as risks associated with the use of borrowed capital were studied.

Examining the Influence of Corporate Governance on Working Capital Management: Insights from Malaysian Public Listed Companies in Selangor

Corporate governance and working capital management (WCM) are treated as essential subjects in financial management. Many researchers have studied the influence of corporate governance, but only a few of them have connected it with WCM efficiency. Particularly in Malaysia, there has been little concentration given to the relationship between corporate governance attributes and the WCM of the companies. Therefore, the present study intends to analyse the impact of corporate governance represented by CEO tenure, CEO Duality, Board size and Audit Committee on WCM represented by the current ratio of 35 Selangor-based companies which are listed under the FTSE Bursa Malaysia Top 100 Index.The results from this study show that CEO tenure has a significant negative impact on the current ratio, while CEO duality has a positive impact on the current ratio. Moreover, board size has no significant impact on the current ratio, and the audit committee has a significant positive impact on the current ratio. These findings imply that effective corporate governance mechanisms can significantly affect WCM. The result is expected to enable the owners of the firms to improve their corporate governance practices to enhance WCM efficiency and, furthermore, contribute to the enhancement of the profitability of the firms and maximise shareholders' wealth indirectly. Additionally, the findings from this study can also be a guide for good corporate governance' criteria that significantly affect the efficiency of WCM to be practised by other companies, including SMEs and other organisations.

Financial Openness, Bank Systematic Risk, and Macroprudential Supervision

International experiences have underscored the dual implications of financial openness. Given China’s unique circumstances and its escalating level of financial openness, it is crucial to assess potential impacts on the country’s bank systemic risk. This paper uses the quarterly data of 37 listed banks in China from 2010 to 2022 to explore the relationship between financial openness and systemic risk of the banking system, the mechanism of action, and the moderating effect of macroprudential policy on the two. The findings indicate an inverted “U”-shaped correlation between financial openness and bank systemic risk. On one side of this shape, financial openness primarily exacerbates funding mismatch, thereby increasing the systemic risk of banks. Conversely, on the other side, it primarily alleviates systemic risk by optimizing capital management. Moreover, with the help of macroprudential supervision, the inverted “U”-shaped relationship between financial openness and bank systemic risk leads to a lower level of systemic risk and, at the same time, promotes the early arrival of the inverted “U”-shaped inflection point between financial openness and bank systemic risk. Notably, the impact of financial openness on the systemic risk of joint-stock commercial banks, urban commercial banks, and rural commercial banks is more significant. The above research results provide a regulatory reference for effectively preventing and resolving systemic risk while achieving high-quality openness to the outside world. In deepening financial openness, the banking industry needs to pay attention to the funding mismatch and the efficiency of capital management and implement differential risk supervision and prevention mechanisms for banks with different ownership, which is conducive to the reduction of bank systematic risk.

УПРАВЛІННЯ ЛЮДСЬКИМИ РЕСУРСАМИ ЯК ВАЖЛИВИЙ НАПРЯМОК СУЧАСНОЇ ТЕОРІЇ МЕНЕДЖМЕНТУ

The article is aimed at developing theoretical provisions, methodological approaches, and practical recommendations for the formation and development of the human capital management system. The relevance of the study is due to the theoretical and practical significance of the issues under study related to improving the socio-economic efficiency of human capital management at the regional level in a strategic perspective. The article considers the main components of the management mechanism of enterprise human resources that ensure the efficiency of production and sales processes. The authors emphasize that human resources management of a modern high-tech enterprise is a targeted influence on employees in socio-economic systems in order to successfully solve operational and strategic tasks of the enterprise. The most important goal of the human resources management system of modern enterprises is to maximize the use of the personal potential of the abilities of employees as a subject and the most important resource of business structures. The authors present the system of human resources management of a modern enterprise and emphasize that changes in business structures in the process of strategic development, their share, and growth rate in the market are largely determined by the chosen model of human resources management. The article considers the software of human resources management in the modern economy; a number of problems and reasons for the inefficiency of the human resource management system are outlined. The authors emphasize that in the development and implementation of long-term plans, special attention should be paid to the strategic perspective of human resources management, considering human resources as a potential asset of the enterprise. The study showed that the problems of the inefficiency of the human capital management system are caused, among other things, by the solution of short-term tasks without reference to strategic development, insufficient support from the middle level in the management system; underdeveloped or lagging infrastructure development; lack of material, human, informational, financial and other resources for the implementation of strategic tasks and operational plans.

Capital Adequacy, Asset Quality, Management Efficiency, Earnings Ability, Liquidity and Financial Performance of Deposit Taking Savings and Credit Cooperative Societies in Kenya

The study sought to examine the effect of capital adequacy, asset quality, management efficiency, earnings ability, liquidity and financial performance of Deposit Taking Savings and Credit Cooperative Societies in Kenya. The study originates from the Doctoral dissertation of the first author in which the co-authors served as supervisors. Descriptive and panel regression analysis were applied based on secondary data obtained for the period 2013 to 2022. The study established that capital adequacy has insignificant effect on financial performance of deposit taking SACCOs in Kenya. It was established that asset quality has significant effect on financial performance of deposit taking SACCOs in Kenya. It was established that management efficiency has insignificant effect on financial performance of deposit taking SACCOs in Kenya. It was established that earnings ability has significant effect on financial performance of deposit taking SACCOs in Kenya. The study established that liquidity has insignificant effect on financial performance of deposit taking SACCOs in Kenya. Effective credit risk system should be put in place to ensure proper identification, assessment, monitoring as well as control of credit risks. The study recommends that the managers of SACCOs should strive towards increasing the business net worth while ensuring competitiveness in the business environment. This can be achieved through continuous product innovation alongside having leverage on emerging technology. Additional studies can be done specifically on the effect of capital adequacy, management efficiency and liquidity on financial performance of deposit taking SACCOs in Kenya. This is in view of their insignificant predictive effect on financial performance. As such, additional researches on these variables can be based on different methodological approaches. Keywords: Capital Adequacy, Asset Quality, Management Efficiency, Earnings Ability, Liquidity and Financial Performance

Does the quality management system affect working capital management efficiency? Evidence from Polish firms

Does the quality management system affect working capital management efficiency? Evidence from Polish firms

The Determinant of Regional Development Bank’s Profitability in Indonesia

Regional Development Bank (RDB) is a Regional Owned Enterprise where the majority of ownership is owned by the provincial government and district or city governments within the province which have an important role in regional development and improving the economy of regional communities. The aim of this research is to analyze the factors that affect RDB profitability in Indonesia. The profitability of RDB in this research consists of net interest margin (NIM) and return on assets (ROA). Meanwhile, bank specific variables include bank size (SIZE), fee-based income (FEE), market power (LG), capital adequacy ratio (CAR), non-performing loans (NPL), management efficiency (BOPO), and loan to deposit ratio. (LDR). The data used consists of 24 regional development banks in Indonesia from 2018 to 2022. The results of panel data analysis with random effect model show that there are two bank-specific factors that have a significant affect NIM namely LDR and BOPO. This is in line with the factors that affect ROA, where LDR and BOPO have a significant affect ROA. LG, CAR, and NIM also contribute to the high ROA of RDB in Indonesia. These empirical results can provide an overview of the determinant factors that influence RDB profitability and how RDB management strategies are used to maintain profitability. Apart from that, the Financial Services Authority (OJK) is able to encourage the government to increase capital in RDB. As well as encouraging RDB to increase credit distribution thereby increasing interest charges. Keywords: Regional Development Banks, Profitability, Net interest Margin.

Can human capital be transferred efficiently? Evidence from the F&B companies

PurposeThe purpose of this paper is to investigate publicly traded restaurant companies and food & beverage companies from 2014 to 2019 in Taiwan to explore their human capital efficiency.Design/methodology/approachAccording to the theoretical framework of human capital in micro and macro perspectives, the empirical model is built with two stages; the first stage is to examine the perspective of micro-level human capital theory through determining whether knowledge ability and working experience (proxies for micro-level human capital) can efficiently convert to employee-level output such as salary. The second stage is to test macro-level human capital theory through checking whether company inputs such as salary expenses and benefits expenditures can be efficiently transferred into enterprise annual revenues.FindingsThe results of this research reveal that the average efficiency score of stage 1 is 73.6% while that of stage 2 is 75.1%; this indicates that micro-level human capital has more room to improve than macro-level human capital. Meanwhile, the findings also demonstrate that there is negative relationship between efficiency score from stage 1 and turnover rate; this implies that companies with higher micro-human capital have lower turnover rates. Furthermore, there is significantly positive relationship between a company's efficiency score from stage 2 and its return on equity (ROE).Originality/valueThis study contributes to both academia and industry. From a theoretical perspective, the theory of strategic human resources management is applied through the methodology of production theory to examine human capital management efficiency in the restaurant and food and beverage industry. From a practical perspective, this study identifies the factors that assist the restaurant or food and beverage industry retain employees and gain a solid workforce, because manpower is the core resource for an industry and a country to grow sustainably.

Efficiency of Working Capital & Assets Management in the Function of SMEs Bankruptcy Prediction

Research Question: This research has been conducted with the aim of determining whether it is possible to generate a model that can reliably predict bankruptcy of Serbian small and medium-sized enterprises (SMEs) using Working Capital Management (WCM) and Asset Management (AM) efficiency ratios. Motivation: Motive for this research is the fact there are not many business failure prediction models related to SMEs. In addition, existing models are not focused on efficiency of the two above mentioned categories. Also, previously developed models, especially traditional and ground-breaking ones, are not necessarily aligned with accounting procedures and economic environment of all countries, which indicates the need to develop a model that is adapted for Serbian territory. Idea: The idea is to develop a model that has the ability to predict whether an entity has a tendency to initiate bankruptcy proceedings in the next year. This is useful both for external stakeholders and for SMEs’ owners themselves, as it allows them to better manage resources. Data: The research was conducted on a sample of 100 Serbian SMEs. Data for the calculation of ratio indicators is available on the Business Registers Agency webpage. Tools: The research was conducted as a combination of financial and statistical analysis instruments. Ratio indicators were used for financial analysis part, while statistical analysis was conducted in SPSS program v.26 and includes logistic (binary) regression. Findings: Results of the research indicate that AM efficiency indicators are suitable for SMEs bankruptcy prediction modelling, but also indicate that WCM ratios don’t have great contribution in bankruptcy prediction for Serbian SMEs. A model that has a classification accuracy of 79% has been developed. Contribution: This research empirically tests how selected ratio indicators support SMEs bankruptcy prediction, and therefore can be beneficial for all SMEs stakeholders, but also other researches since the research methodology is explained in details.

The Nexus between Board Composition and the Optimization of Working Capital Management Efficiency: An Empirical Study on the Egyptian Stock Exchange

The Nexus between Board Composition and the Optimization of Working Capital Management Efficiency: An Empirical Study on the Egyptian Stock Exchange

Comprehensive Analysis of Indian Public Sector Banks Financial Performance Using the TOPSIS Method

The government has recently undertaken the consolidation of multiple public sector banks. The primary motivation for conducting this research is to investigate this consolidation effort. The objective of this article is to identify the factors influencing the performance of public sector banks in India and explore the relationships between these factors and the performance of government-operated banks. Within this article, we will analyze financial data from all public sector commercial banks spanning an 11-year period, from 2009 to 2019. Both the system generalized method of moments (GMM) analysis and canonical correlation analysis (CCA) have been employed to assess the impact of determinants on the evaluation of public sector bank performance. The assessment of performance is carried out using the CAMEL framework, which encompasses Capital Adequacy, Assets Quality, Management Efficiency, Earnings, and Liquidity. It's worth noting that the government has recently undergone the consolidation of several public sector banks, which serves as the impetus for this study. The primary aim of this article is to ascertain the variables that shape the performance of Indian public sector banks and their interconnections. Within this research, we will scrutinize financial data from all public sector commercial banks over an 11-year span, spanning from 2009 to 2019. Both the utilization of the system generalized method of moments (GMM) analysis and canonical correlation analysis (CCA) have been deployed to examine how various determinants influence the evaluation of public sector bank performance. The assessment of performance has been conducted through the utilization of the CAMEL framework, an acronym representing Capital Adequacy, Assets Quality, Management Efficiency, Earnings, and Liquidity. This framework is widely employed for appraising the financial soundness of the Indian banking system. The financial well-being of public sector banks (PSBs) holds paramount importance for several reasons. Primarily, PSBs play a pivotal role in delivering financial services to the general populace, especially in rural and semi-urban regions where private banks may not have a significant presence. Consequently, the accessibility of financial services to a broad segment of the population directly influences their financial stability.

Comprehensive Analysis of the Financial Performance of Indian Public Sector Banks

Recently, the government consolidated numerous public sector banks. The basis for conducting this study is this. This article's goal is to pinpoint the variables that influence public sector bank performance in India as well as the connections between those variables and the performance of particular banks operated by the government. In this article, we will examine the financial information from all public sector commercial banks over an 11-year period (from 2009 to 2019). Both the system generalised method of moments (GMM) analysis and the canonical correlation analysis (CCA) have been used to analyse the effects of determinants on public sector bank performance assessment.. CAMEL, which stands for Capital Adequacy, Assets Quality, Management Efficiency, Earning, and Liquidity, has been used to assess performance. Several public sector banks have lately been consolidated by the government. The basis for conducting this study is this. This article's goal is to identify the variables that determine Indian public sector banks' performance as well as the connections between those variables and performance. In this study, we will examine the financial data from all public sector commercial banks over an 11-year period (from 2009 to 2019). Both the system generalised method of moments (GMM) analysis and canonical correlation analysis (CCA) have been employed to assess the influence of determinants on the performance measurement of public sector banks Performance has been assessed using the CAMEL framework, which stands for Capital Adequacy, Assets Quality, Management Efficiency, Earnings, and Liquidity. This framework is widely used to evaluate the financial system in India. For a number of reasons, the financial health of public sector banks (PSBs) is crucial.First and foremost, PSBs are essential in delivering financial services to the general population, particularly in rural and semi-urban areas where private banks might not be present. Therefore, the availability of financial services to a wide portion of the public has a direct impact on their financial health.Second, PSBs frequently serve as the primary lenders to important economic sectors like infrastructure, SMEs, and agriculture. As a result, their financial performance may have a big impact on how these industries grow and develop. Thirdly, PSBs frequently have government ownership and are subject to public scrutiny. As a result, one key indicator of their efficiency is their financial performance. Alternate Parameters taken as SBI, BOB, PNB, BOI, CANARA. Evaluation Parameter taken as The following financial performance indicators have been considered: net profit margin%, return on assets%, return on net worth%, interest income to total assets%, interest expenses to total assets%, and operating expenses to total. In August 2015, a target was set for PSBs to raise $110,000 crore from the markets by the years 2018-19. However, compared to this target, only Rs. 7,726 crore was raised between January 2015 and March 2017. Given the CCEA's assurance to prevent an excessive influx of banking equity issues in the market simultaneously, it appears impossible to achieve this goal by March 2019.DFS decided that additional capital injections will only be granted if specific PSBs met the performance standards stated in the MoUs with those PSBs (signed in February/March 2012). However, in practice, this was not done. According to Audit Report No. 28 of 2017 55, the MoU targets for some metrics decreased year over year while no specific targets were specified for others.

Does management of working capital enhance firm value? Empirical analysis of manufacturing enterprises in India

The long-term financial health of a corporation is assessed by its capacity to meet short-term financial commitments. Optimum working capital that maximizes enterprise value varies across companies. The purpose of this paper is to investigate whether Indian manufacturing enterprises’ firm values are influenced by working capital management efficiency. The data are taken from 2016 to 2022 (a seven-year period) for 223 top BSE-listed manufacturing companies. Firm value (explained variable) is proxied using Tobin’s Q, and the constituents of working capital, which include the net trade cycle, inventory period, debtors’ collection period, and creditor payment period, are taken as explanatory variables. The study also controls for any differences in firm characteristics and economic conditions by employing firm size, age, current ratio, net profit ratio, sale growth and GDP growth rate. Balanced-panel data analysis is conducted by employing a two-step generalized method of moment technique. Net trade cycle, inventory period and debtors’ collection period are found to have a strong and significant positive impact on Tobin’s Q. The findings however did not report any evidence of the significant relationship between creditor payment period and Tobin’s Q. Additionally, the outcomes also evidenced that firm value is positively impacted by company size, net profit ratio, sales growth and GDP, whereas negatively affected by firm age. This paper suggests that manufacturing firms may potentially enhance their firm value by prolonging the net trade cycle, period of inventory and lengthening the credit period to customers till the level of attainment of an optimum working capital.