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The Moderating Effect of Size on the Relationship Between Liquidity Management and Sustainable Profitability: Evidence from BRICS Financial Firms

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  • Foray Ansumana Bangali Tarawallie

    (Department of Business Administration, Faculty of Economics and Administrative Sciences, Cyprus International University, Lefkosa 99040, Cyprus)

  • Murad Bein

    (Department of Accounting and Finance, Faculty of Economics and Administrative Sciences, Cyprus International University, Lefkosa 99040, Cyprus)

Abstract

The aim of our research is to analyze the impact of size on the association between liquidity management and sustainable profitability of BRICS financial enterprises from 2000 to 2022. The analysis specifically focusing on banks listed on the BRICS stock market. This research investigated how the size of BRICS financial businesses affects the link between liquidity management (LR), return on assets (ROA), and Tobin’s Q. The research used two analytical techniques, namely GMM and Fully Modified Ordinary Least Squares (FMOLS), to assess the moderating impact of size on the association between liquidity and sustainable profitability. The study’s conclusions showed that the relationship between LR and profitability was statistically significantly impacted by size. Organizational scale plays a crucial role in shaping the dynamics of financial performance, as evidenced by the substantial positive moderating effect of size on the relationship between sustainable profitability and liquidity ratio. The LR evaluates a company’s ability to use liquid assets to meet short-term obligations, whereas sustainable profitability indicates how well BRICS financial firms generate profits by using their assets. Moreover, this analysis provides valuable information and assists bank management in making strategic choices. Enhancing their comprehension of the impact of size on the interplay between liquidity and profitability might enable managers to adopt more efficient financial strategies, thereby gaining a greater competitive advantage.

Suggested Citation

  • Foray Ansumana Bangali Tarawallie & Murad Bein, 2025. "The Moderating Effect of Size on the Relationship Between Liquidity Management and Sustainable Profitability: Evidence from BRICS Financial Firms," Sustainability, MDPI, vol. 17(18), pages 1-22, September.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:18:p:8128-:d:1745882
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