IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v17y2025i18p8128-d1745882.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/17/18/8128/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/17/18/8128/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Murillo Campello & Gaurav Kankanhalli, 2024. "Corporate decision-making under uncertainty: review and future research directions," Chapters, in: David J. Denis (ed.), Handbook of Corporate Finance, chapter 15, pages 548-590, Edward Elgar Publishing.
    2. John Ayodele Ajayi & Qudus Adekunle Lawal, 2021. "Effect of Liquidity Management on Banks Profitability," Business & Management Compass, University of Economics Varna, issue 2, pages 220-237.
    3. Sujan Chandra Paul & Md. Asiqur Rahman & Jiasmin, 2021. "Current Assets, Current Liabilities and Profitability: A Cross Industry Analysis," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 11(1), pages 55-68, June.
    4. Livdan, Dmitry & Nezlobin, Alexander, 2021. "Investment, capital stock, and replacement cost of assets when economic depreciation is non-geometric," Journal of Financial Economics, Elsevier, vol. 142(3), pages 1444-1469.
    5. James R. Barth & Daniel E. Nolle & Triphon Phumiwasana & Glenn Yago, 2003. "A Cross‐Country Analysis of the Bank Supervisory Framework and Bank Performance," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 12(2), pages 67-120, May.
    6. Anureet Virk Sidhu & Shailesh Rastogi & Rajani Gupte & Venkata Mrudula Bhimavarapu, 2022. "Impact of Liquidity Coverage Ratio on Performance of Select Indian Banks," JRFM, MDPI, vol. 15(5), pages 1-17, May.
    7. Muhammad Haris & HongXing Yao & Gulzara Tariq & Ali Malik & Hafiz Mustansar Javaid, 2019. "Intellectual Capital Performance and Profitability of Banks: Evidence from Pakistan," JRFM, MDPI, vol. 12(2), pages 1-26, April.
    8. Saidu Koroma & Murad Bein, 2024. "The Moderating Effect of Economic Policy Uncertainty on the Relationship Between Working Capital Management and Profitability: Evidence from UK Non-Financial Firms," SAGE Open, , vol. 14(2), pages 21582440241, May.
    9. Juan Li & Shengjie Lai & George F. Gao & Weifeng Shi, 2021. "The emergence, genomic diversity and global spread of SARS-CoV-2," Nature, Nature, vol. 600(7889), pages 408-418, December.
    10. 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.
    11. Sujan Chandra Paul & Md. Asiqur Rahman & Jiasmin, 2021. "Current Assets, Current Liabilities and Profitability: A Cross Industry Analysis," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 11(1), pages 55-68.
    12. David Souder & J. Myles Shaver & Jared D. Harris & Abdullatif Alrashdan, 2024. "Performance metrics in strategy research: A new metric and method for assessing dynamic value," Strategic Management Journal, Wiley Blackwell, vol. 45(1), pages 144-167, January.
    13. Jennie Bai & Arvind Krishnamurthy & Charles†Henri Weymuller, 2018. "Measuring Liquidity Mismatch in the Banking Sector," Journal of Finance, American Finance Association, vol. 73(1), pages 51-93, February.
    14. Wang, Yung-Jang, 2002. "Liquidity management, operating performance, and corporate value: evidence from Japan and Taiwan," Journal of Multinational Financial Management, Elsevier, vol. 12(2), pages 159-169, April.
    15. Athanasoglou, Panayiotis & Delis, Manthos & Staikouras, Christos, 2006. "Determinants Of Bank Profitability In The South Eastern European Region," MPRA Paper 10274, University Library of Munich, Germany.
    16. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. İsmail Cakmak & Selcen Öztürk, . "Analysing Impact of Economic Crises on Sector Profits with a New Approach," Prague Economic Papers, Prague University of Economics and Business, vol. 0.
    2. Wang, Xiaoying & Sadiq, Ramla & Khan, Tahseen Mohsan & Wang, Rong, 2021. "Industry 4.0 and intellectual capital in the age of FinTech," Technological Forecasting and Social Change, Elsevier, vol. 166(C).
    3. Muhammad Haris & Yong Tan & Ali Malik & Qurat Ul Ain, 2020. "A Study on the Impact of Capitalization on the Profitability of Banks in Emerging Markets: A Case of Pakistan," JRFM, MDPI, vol. 13(9), pages 1-21, September.
    4. Simone Rossi & Mariarosa Borroni & Mariacristina Piva & Andrea Lippi, 2021. "Abnormal Loan Growth and Bank Profitability: Some Evidence from the Recent Crisis," International Journal of Business and Management, Canadian Center of Science and Education, vol. 14(7), pages 1-36, July.
    5. Desjardins, Denise & Dionne, Georges & Koné, N’Golo, 2022. "Reinsurance demand and liquidity creation: A search for bicausality," Journal of Empirical Finance, Elsevier, vol. 66(C), pages 137-154.
    6. Kusi, Baah Aye & Agbloyor, Elikplimi Komla & Gyeke-Dako, Agyapomaa & Asongu, Simplice Anutechia, 2020. "Financial Sector transparency and net interest margins: Should the private or public Sector lead financial Sector transparency?," Research in International Business and Finance, Elsevier, vol. 54(C).
    7. Valentina Flamini & Miss Liliana B Schumacher & Mr. Calvin A McDonald, 2009. "The Determinants of Commercial Bank Profitability in Sub-Saharan Africa," IMF Working Papers 2009/015, International Monetary Fund.
    8. Fakhri J. Hasanov & Nigar Bayramli & Nayef Al-Musehel, 2018. "Bank-Specific and Macroeconomic Determinants of Bank Profitability: Evidence from an Oil-Dependent Economy," IJFS, MDPI, vol. 6(3), pages 1-21, September.
    9. Chang, Chong-Chuo, 2018. "Cash conversion cycle and corporate performance: Global evidence," International Review of Economics & Finance, Elsevier, vol. 56(C), pages 568-581.
    10. Alexander Bechtel & Angelo Ranaldo & Jan Wrampelmeyer, 2023. "Liquidity Risk and Funding Cost," Review of Finance, European Finance Association, vol. 27(2), pages 399-422.
    11. Maria‐Eleni K. Agoraki & Georgios P. Kouretas & Anastassios Tsamis, 2021. "The determinants of performance in the Eurozone banking sector: Core versus periphery Eurozone economies," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 416-429, January.
    12. Cemil ÇİFTÇİ & Dilek DURUSU-ÇİFTÇİ, 2019. "Determinants of Bank Profitability after Transition to the Strong Economy Program in Turkey," Sosyoekonomi Journal, Sosyoekonomi Society.
    13. Dalci, Ilhan & Ozyapici, Hasan, 2018. "Working capital management policy in health care: The effect of leverage," Health Policy, Elsevier, vol. 122(11), pages 1266-1272.
    14. Ashwin Madhou & Imad Moosa & Vikash Ramiah, 2015. "Working Capital as a Determinant of Corporate Profitability," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 18(04), pages 1-17, December.
    15. Clement Olalekan Olaniyi & Olayemi O. Simon-Oke & Olufemi Bodunde Obembe & Segun Thompson Bolarinwa, 2017. "Re-examining Firm Size-profitability Nexus: Empirical Evidence from Non-financial Listed Firms in Nigeria," Global Business Review, International Management Institute, vol. 18(3), pages 543-558, June.
    16. Chi Huu Lu & Thich Nguyen, 2025. "Income Diversification Strategy in Banks and the Main Driver of Intellectual Capital: New Empirical Evidence from a Developing Country," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(3), pages 13310-13348, September.
    17. Shikha Bhatia & Aman Srivastava, 2016. "Working Capital Management and Firm Performance in Emerging Economies: Evidence from India," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 41(2), pages 71-87, May.
    18. Alexandra Horobet & Magdalena Radulescu & Lucian Belascu & Sandra Maria Dita, 2021. "Determinants of Bank Profitability in CEE Countries: Evidence from GMM Panel Data Estimates," JRFM, MDPI, vol. 14(7), pages 1-23, July.
    19. Sanjeev Kumar & K. S. Ranjani, 2018. "Dividend Behaviour of Indian-listed Manufacturing and Service Sector Firms," Global Business Review, International Management Institute, vol. 20(1), pages 179-193, February.
    20. Carmela D’Avino & Eric Girardin & Mimoza Shabani, 2022. "Bank liquidity creation: A new global dataset for developing and emerging countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(2), pages 529-570, May.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    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:gam:jsusta:v:17:y:2025:i:18:p:8128-:d:1745882. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.