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Influence of Macroeconomic Factors on Financial Liquidity of Companies: Evidence from Poland

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  • Jarosław Nowicki

    (Department of Controlling, Financial Analysis and Valuation, Poznań University of Economics and Business, al. Niepodległości 10, 61-875 Poznań, Poland)

  • Piotr Ratajczak

    (Department of Controlling, Financial Analysis and Valuation, Poznań University of Economics and Business, al. Niepodległości 10, 61-875 Poznań, Poland)

  • Dawid Szutowski

    (Department of Controlling, Financial Analysis and Valuation, Poznań University of Economics and Business, al. Niepodległości 10, 61-875 Poznań, Poland)

Abstract

The objective of this study is to examine the relationship between macroeconomic variables and the financial liquidity of companies. In this context, two main research questions were formulated. Firstly, which macroeconomic variables impact the financial liquidity of companies? Secondly, what is the direction and strength of the influence of these macroeconomic variables on the financial liquidity of companies? This study employed panel data analysis conducted on an unbalanced panel of 5327 Polish enterprises over the period 2003–2021. The primary research method employed was linear regression (pooled OLS) with robust standard errors clustered at the firm level. The main results of this study indicate that (1) the majority of macroeconomic variables, which illustrate the overall efficiency of the economic system (GDP per capita, ratio of foreign trade goods balance to GDP, CPI, and money supply), demonstrate a positive relationship with corporate liquidity; only the consumption-to-GDP ratio exhibits a negative relationship; (2) a positive relationship was observed between the number of building permits for housing and financial liquidity; (3) variables from the informal institutional environment indicate a positive relationship for the employment rate and a negative relationship for the share of the pre-working age population in the overall population; (4) the relationship between the ratio of internal expenditures on research and development to GDP and corporate liquidity is positive. This study addresses limitations of previous research by examining the impact of macroeconomic factors, particularly those from the institutional and technical environment, on corporate financial liquidity.

Suggested Citation

  • Jarosław Nowicki & Piotr Ratajczak & Dawid Szutowski, 2024. "Influence of Macroeconomic Factors on Financial Liquidity of Companies: Evidence from Poland," Risks, MDPI, vol. 12(7), pages 1-22, July.
    • Handle: RePEc:gam:jrisks:v:12:y:2024:i:7:p:114-:d:1437910
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    References listed on IDEAS

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    1. Jacek Jaworski & Leszek Czerwonka, 2021. "Meta-study on the relationship between profitability and liquidity of enterprises in macroeconomic and institutional environment," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 48(2), pages 233-246, June.
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    4. Qiwang Zhang & Ji Wang & Jiannan Geng, 2022. "Corporate Cash Holding Patterns From A Performance Perspective," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 67(02), pages 821-848, March.
    5. Carol Cheong & Huy Viet Hoang & David McMillan, 2021. "Macroeconomic factors or firm-specific factors? An examination of the impact on corporate profitability before, during and after the global financial crisis," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1959703-195, January.
    6. Lins, Karl V. & Servaes, Henri & Tufano, Peter, 2010. "What drives corporate liquidity? An international survey of cash holdings and lines of credit," Journal of Financial Economics, Elsevier, vol. 98(1), pages 160-176, October.
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