SME Liquidity and Its Determinants

The main objective of this study is to examine the determinants of liquidity (measured using cash conversion cycle- CCC) on the Malaysian SMEs. This study is based on 509 SME-observations for the period of 2005 to 2013.Employing the fixed effect regression, the findings indicate that the SMEs with high cash holdings tend to have CCC. Furthermore, this study also finds that the SMEs with the bank loan financing have lower CCC. This study argues that the accessibility to the bank loans facilities could serve as quality certification leading to longer payable period grantedby the suppliers, hence, shorter CCC. This study adds to the existing literature on the factors that influence working capital management, thereby providing relevant information that may help the companies in working capital management. On the practical side, it also provides inputs to policymakers in formulating policies for the development of Malaysian SMEs.

کلیدواژه ها:

SME ، liquidity ، working capital management ، cash conversion cycle