IDEAS home Printed from https://ideas.repec.org/a/eme/ijppmp/ijppm-12-2017-0354.html
   My bibliography  Save this article

Determinants of liquidity in Malaysian SMEs: a quantile regression approach

Author

Listed:
  • Shaista Wasiuzzaman

Abstract

Purpose - The management of liquidity has always been seen as a critical but often ignored issue in finance. Despite the abundance of studies on liquidity management, these studies mainly focus on developed countries and on large firms. Liquidity is critical for the small firm but studies on liquidity management in small and medium enterprises (SMEs) are lacking. The purpose of this paper is to examine the firm-level determinants of liquidity of SMEs in Malaysia. Design/methodology/approach - Data are collected for a total of 986 small firms in Malaysia from 2011 to 2014, resulting in a total of 2,683 observations. Firm-specific variables and the effect of the economy are considered as the possible determinants of liquidity. Ordinary least squares (OLS) regression analysis with standard errors adjusted for firm-level clustering and quantile regression analysis are used for this purpose. Findings - Analysis using OLS regression technique indicates that a firm’s profitability, its growth, asset tangibility, size, age and firm status are significant factors in influencing its liquidity decision. Leverage and economic condition are not found to have any significant influence on liquidity. However, quantile regression analysis provides a different picture especially for SMEs with liquidity at the quantile levels ofθ=0.10 and 0.90. Atθ=0.10, only profitability, tangibility and firm status are significant, while atθ=0.90, tangibility, size, firm status and, to some extent, age are significant in influencing liquidity levels. Originality/value - To the author’s knowledge, this is the first study analyzing the liquidity decision of SMEs in an emerging market such as Malaysia. Most studies on liquidity management of SMEs are focused on developed countries due to data availability but these studies are also only a handful. Additionally, this study uses quantile regression analysis which highlights the need to analyze financial decisions at different levels rather than at the aggregate level as done in OLS regression analysis.

Suggested Citation

  • Shaista Wasiuzzaman, 2018. "Determinants of liquidity in Malaysian SMEs: a quantile regression approach," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 67(9), pages 1566-1584, November.
    • Handle: RePEc:eme:ijppmp:ijppm-12-2017-0354
    DOI: 10.1108/IJPPM-12-2017-0354
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/IJPPM-12-2017-0354/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/IJPPM-12-2017-0354/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/IJPPM-12-2017-0354?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ainon Ramli & Liafisu Sina Yekini, 2022. "Cash Flow Management among Micro-Traders: Responses to the COVID-19 Pandemic," Sustainability, MDPI, vol. 14(17), pages 1-21, September.
    2. Jacek Jaworski & Leszek Czerwonka, 2022. "Which Determinants Matter for Working Capital Management in Energy Industry? The Case of European Union Economy," Energies, MDPI, vol. 15(9), pages 1-18, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:ijppmp:ijppm-12-2017-0354. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.