The impact of working capital management to profitability of top asset-based banks on the selected ASEAN countries for the period 2008-2015

• Main Authors: Lee, Alicia Grace., Luna, Katherine., Pua, Cindy Tan., Salayog, Jona Mae.
• Format: text
• Language: English
• Published: Animo Repository 2017
• Subjects: Bank capital > Southeast Asia; Working capital > Southeast Asia; Bank profits > Southeast Asia
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/6276
• Institution: De La Salle University

This study aimed to determine the impact of working capital management on a bank’s profitability. To investigate the relationship between the two, the researchers gathered data from the annual financial reports of the banks collected from their respective official websites. The study utilized secondary data of four countries namely, Indonesia, Malaysia, Philippines and Thailand, with 10 banks each and 8 years of observations between 2008 and 2015. Adopting the causal research design, the data were analyzed using panel analysis. Return on equity (ROE) served as the dependent variable while the cash conversion cycle (CCC), creditors payment period (CPP), debtors collection period (DCP), leverage, size, growth and credit risk were the independent variables. The research results have shown that the working capital management had a significant impact to the bank's profitability. Moreover, it was revealed that CCC had a positive significant relationship with profitability for Malaysia and Thailand. TDA, on the other hand, showed a positive significant relationship with Indonesia and Philippines but a negative significant relationship with Thailand. Meanwhile, size had a strongly negative relation to profitability for countries Malaysia, Philippines and Thailand. Similarly, LLR exhibited had a strong negative relation with profitability for Indonesia, Philippines and Thailand. Lastly, GRO, and CPP were only significant and positively related to profitability for countries Malaysia and Thailand, respectively. Based on the findings of the study, the banking sectors may use the results to further enhance their operations. Profitability may be enhanced by minimizing the inventory turnover and accounts receivable, and by decreasing the creditors’ turnover ratios. Particularly, this turnover ratios based on the results and findings of the data in the study. This study will benefit the banking sectors for this will depict as to which variables and components should be given more attention and proper management of