Determinants of firm liquidity in Central and Eastern Europe SMEs

Iman Samir Youssef, Adel Al Alam and Charbel Salloum ()
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Iman Samir Youssef: NGU - NewGiza University
Adel Al Alam: Holy-Spirit University of Kaslik [Jounieh]
Charbel Salloum: Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School, CREGO - Centre de Recherche en Gestion des Organisations - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UB - Université de Bourgogne - UBFC - Université Bourgogne Franche-Comté [COMUE] - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]

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Abstract: This study examines firm-level determinants of liquidity as reflected by the cash conversion cycle for SMEs in Central and Eastern Europe. This study focuses on non-financial SME firms in Central and Eastern Europe. GDP growth was the only macroeconomic variable used in this study and the only variable with insignificant influence on liquidity in regression conducted for the seven countries studied, using the GMM estimation method. The sensitivity of liquidity to explanatory variables (profitability, leverage, tangibility, growth, age, size, and GDP growth) was examined on data composed of 160 publicly-listed SMEs with 1,600 the total number of observations for the period 2011-2019. Profitability, leverage, and size have a positive significant influence on liquidity. The positive significant influence of profitability reflects how SMEs with low levels of liquidity depend on profitability to meet cash requirements for investing in liquidity.

Keywords: System GMM; Liquidity; SME; Central and Eastern Europe (search for similar items in EconPapers)
Date: 2022-11-22
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Published in International Journal of Globalisation and Small Business, 2022, 13 (2), pp.127-146. ⟨10.1504/IJGSB.2022.10049156⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04150467

DOI: 10.1504/IJGSB.2022.10049156

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