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

Yıl 2023, , 38 - 46, 21.01.2024
https://doi.org/10.35343/kosbed.1326211

Öz

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

Kaynakça

  • Agbi, Eniola Samuel and Ismaila Yusuf (2017). “Short-Term Asset-Mix Accounting (STAMA) and Profitability of Manufacturing Conglomerates in Nigeria”. Journal of Management and Social Sciences, 6 (1): 199-212.
  • Akomeah, Jacob and Siaw Frimpong (2019). “Effect of Working Capital Management on Profitability of Listed Manufacturing Companies in Ghana”. International Journal of Finance and Banking Research, 5 (2): 29-35.
  • Aktas, Nihat, Ettore Croci and Dimitris Petmezas (2015). “Is Working-Capital Management Value-Enhancing? Evidence From Firm Performance and Investments”. Journal of Corporate Finance, 30: 98-113.
  • Aminu, Yusuf and Nasruddin Zainudin (2016). “A Review of Anatomy of Working Capital Management Theories and the Relevant Linkages to Working Capital Components: A Theoretical Building Approach”. European Journal of Business and Management, 7 (2): 10-18.
  • Ani, Wilson Uchenna, Ifeoma Mary Okwo and David Okelue Ugwunta (2012). “Effects of Working Capital Management on Profitability: Evidence from The Top Five Beer Brewery Firms in The World”. Asian Economic and Financial Review, 2 (8): 966-982.
  • Anyanwaokoro, Mike (1996). Banking Methods and Processes. Enugu: Hosanna Publications.
  • Bagh, Tanveer, Muhammad Imran Nazir, MuhammadAsif Khan, Muhammad Atif Khan and Sadaf Razzaq (2016). “The Impact of Working Capital Management on Firms’ Financial Performance Evidence from Pakistan”. International Journal of Economics and Financial Issues, 6 (3): 1097-1105.
  • Baker, H. Kent, Satish Kumar, Sisira Colombage and Harsh Partap Singh (2017). “Working Capital Management Practices in India: Survey Evidence”. Managerial Finance, 43 (3): 331–353.
  • Baños-Caballero, Sonia, Pedro J. García-Teruel and Pedro Martínez-Solano (2012). “How Does Working Capital Management Affect The Profitability of Spanish SMEs”? Small Business Economics, 39 (2): 517-529.
  • Bhattacheryay, Suranjan (2021). “Multinational Enterprises Motivational Factors in Capitalizing Emerging Market Opportunities and Preparedness of India”. Journal of Financial Economic Policy, 12 (4): 609-640.
  • Bobáková, I. Viktória (2003). “Raising The Profitability of Commercial Banks”. Biatec, 11 (4): 21-25. Deloof, Marc (2003). “Does Working Capital Management Affect Profitability of Belgian Firms”? Journal of Business, Finance and Accounting, 30 (3-4): 306-686.
  • Diebold, Francis X. and Kamil Yilmaz (2013). “Measuring the Dynamics of Global Business Cycle Connectedness”. In: S. J. Koopman and N. Shephard (Eds.). Unobserved Components and Time Series Econometrics: Essays in Honor of Andrew C. Harvey. Oxford: Oxford University Press, 1-28.
  • Foss J., Nicolai, Ram Mudambi and Samuele Murtinu (2018). “Taxing the Multinational Enterprise: On the Forced Redesign of Global Value Chains and Other Inefficiencies”. Journal of International Business Studies, 50 (9): 1644-1655.
  • Gakure, Roselyn, John Kiprotich Cheluget, Jared Abongo Onyango and Victor Keraro (2012). “Working Capital Management and Profitability of Manufacturing Firms Listed at The Nairobi Stock Exchange”. Prime Journal of Business Administration and Management (BAM), 2 (9): 680-686.
  • Gitman, Lawrence J. (2007). Principles of Managerial Finance. 12th ed. Boston, MA: Pearson Education, Inc.
  • Kalaivani, P. and K. Jothi (2017). “Impact of Working Capital Management on Profitability of the Select Car Manufacturing Companies in India”. International Journal of Pure and Applied Mathematics, 116 (24): 13-21.
  • Kaur, Sandhar Simranjet and Janglani Silky (2013). “A Study on Liquidity and Profitability of selected Indian Cement Companies: A Regression Model Approach”. International Journal of Economics, Commerce and Management, 1 (1): 1-15.
  • Knauer, Thorsten and Arnt Wöhrmann (2013). “Working-Capital Management and Firm Profitability”. Journal of Management Control, 24 (1): 77-87.
  • Kwenda, Farai and Merle Holden (2013). “Working Capital Structure and Financing Pattern of Selected JSE-Listed Firms”. Mediterranean Journal of Social Sciences, 4 (13): 531-540.
  • Nguyen, Anh Huu, Huong Thanh Pham and Hang Thu Nguyen (2020). “Impact of Working Capital Management on Firm’s Profitability: Empirical Evidence from Vietnam”. The Journal of Asian Finance, Economics, and Business, 7 (3): 115-125.
  • Pesaran, M. Hashem (2015). “Testing Weak Cross-Sectional Dependence in Large Panels”. Econometric Reviews, 34 (6-10): 1089-1117.
  • Zawaira, Tendai and Enard Mutenheri (2014). “The Association Between Working Capital Management and Profitabilty of Non-Financial Companies Listed on Zimbabwe Stock Exchange”. International Journal of Research in Social Sciences, 3 (8): 114-120.

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

Yıl 2023, , 38 - 46, 21.01.2024
https://doi.org/10.35343/kosbed.1326211

Öz

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

Kaynakça

  • Agbi, Eniola Samuel and Ismaila Yusuf (2017). “Short-Term Asset-Mix Accounting (STAMA) and Profitability of Manufacturing Conglomerates in Nigeria”. Journal of Management and Social Sciences, 6 (1): 199-212.
  • Akomeah, Jacob and Siaw Frimpong (2019). “Effect of Working Capital Management on Profitability of Listed Manufacturing Companies in Ghana”. International Journal of Finance and Banking Research, 5 (2): 29-35.
  • Aktas, Nihat, Ettore Croci and Dimitris Petmezas (2015). “Is Working-Capital Management Value-Enhancing? Evidence From Firm Performance and Investments”. Journal of Corporate Finance, 30: 98-113.
  • Aminu, Yusuf and Nasruddin Zainudin (2016). “A Review of Anatomy of Working Capital Management Theories and the Relevant Linkages to Working Capital Components: A Theoretical Building Approach”. European Journal of Business and Management, 7 (2): 10-18.
  • Ani, Wilson Uchenna, Ifeoma Mary Okwo and David Okelue Ugwunta (2012). “Effects of Working Capital Management on Profitability: Evidence from The Top Five Beer Brewery Firms in The World”. Asian Economic and Financial Review, 2 (8): 966-982.
  • Anyanwaokoro, Mike (1996). Banking Methods and Processes. Enugu: Hosanna Publications.
  • Bagh, Tanveer, Muhammad Imran Nazir, MuhammadAsif Khan, Muhammad Atif Khan and Sadaf Razzaq (2016). “The Impact of Working Capital Management on Firms’ Financial Performance Evidence from Pakistan”. International Journal of Economics and Financial Issues, 6 (3): 1097-1105.
  • Baker, H. Kent, Satish Kumar, Sisira Colombage and Harsh Partap Singh (2017). “Working Capital Management Practices in India: Survey Evidence”. Managerial Finance, 43 (3): 331–353.
  • Baños-Caballero, Sonia, Pedro J. García-Teruel and Pedro Martínez-Solano (2012). “How Does Working Capital Management Affect The Profitability of Spanish SMEs”? Small Business Economics, 39 (2): 517-529.
  • Bhattacheryay, Suranjan (2021). “Multinational Enterprises Motivational Factors in Capitalizing Emerging Market Opportunities and Preparedness of India”. Journal of Financial Economic Policy, 12 (4): 609-640.
  • Bobáková, I. Viktória (2003). “Raising The Profitability of Commercial Banks”. Biatec, 11 (4): 21-25. Deloof, Marc (2003). “Does Working Capital Management Affect Profitability of Belgian Firms”? Journal of Business, Finance and Accounting, 30 (3-4): 306-686.
  • Diebold, Francis X. and Kamil Yilmaz (2013). “Measuring the Dynamics of Global Business Cycle Connectedness”. In: S. J. Koopman and N. Shephard (Eds.). Unobserved Components and Time Series Econometrics: Essays in Honor of Andrew C. Harvey. Oxford: Oxford University Press, 1-28.
  • Foss J., Nicolai, Ram Mudambi and Samuele Murtinu (2018). “Taxing the Multinational Enterprise: On the Forced Redesign of Global Value Chains and Other Inefficiencies”. Journal of International Business Studies, 50 (9): 1644-1655.
  • Gakure, Roselyn, John Kiprotich Cheluget, Jared Abongo Onyango and Victor Keraro (2012). “Working Capital Management and Profitability of Manufacturing Firms Listed at The Nairobi Stock Exchange”. Prime Journal of Business Administration and Management (BAM), 2 (9): 680-686.
  • Gitman, Lawrence J. (2007). Principles of Managerial Finance. 12th ed. Boston, MA: Pearson Education, Inc.
  • Kalaivani, P. and K. Jothi (2017). “Impact of Working Capital Management on Profitability of the Select Car Manufacturing Companies in India”. International Journal of Pure and Applied Mathematics, 116 (24): 13-21.
  • Kaur, Sandhar Simranjet and Janglani Silky (2013). “A Study on Liquidity and Profitability of selected Indian Cement Companies: A Regression Model Approach”. International Journal of Economics, Commerce and Management, 1 (1): 1-15.
  • Knauer, Thorsten and Arnt Wöhrmann (2013). “Working-Capital Management and Firm Profitability”. Journal of Management Control, 24 (1): 77-87.
  • Kwenda, Farai and Merle Holden (2013). “Working Capital Structure and Financing Pattern of Selected JSE-Listed Firms”. Mediterranean Journal of Social Sciences, 4 (13): 531-540.
  • Nguyen, Anh Huu, Huong Thanh Pham and Hang Thu Nguyen (2020). “Impact of Working Capital Management on Firm’s Profitability: Empirical Evidence from Vietnam”. The Journal of Asian Finance, Economics, and Business, 7 (3): 115-125.
  • Pesaran, M. Hashem (2015). “Testing Weak Cross-Sectional Dependence in Large Panels”. Econometric Reviews, 34 (6-10): 1089-1117.
  • Zawaira, Tendai and Enard Mutenheri (2014). “The Association Between Working Capital Management and Profitabilty of Non-Financial Companies Listed on Zimbabwe Stock Exchange”. International Journal of Research in Social Sciences, 3 (8): 114-120.
Toplam 22 adet kaynakça vardır.

Ayrıntılar

Birincil Dil İngilizce
Konular Finans
Bölüm Makaleler
Yazarlar

Donovan Jaıros 0000-0002-3875-1702

Erken Görünüm Tarihi 5 Ocak 2024
Yayımlanma Tarihi 21 Ocak 2024
Yayımlandığı Sayı Yıl 2023

Kaynak Göster

APA Jaıros, D. (2024). The Effects of Working Capital Management on Firms’ Efficiency: Case of Turkish and Zimbabwean Commercial Banks. Kocaeli Üniversitesi Sosyal Bilimler Dergisi, 2(46), 38-46. https://doi.org/10.35343/kosbed.1326211

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