The Impact of Bank Size on the Relationship Between Cash Flow and Liquidity: Evidence From Egyptian Listed Banks

Abstract

There is a scarcity in previous studies on the impact of liquidity and size on cash flows. To address this, in this paper we examine the relationship between liquidity and various types of cash flow, including NOFC, INF, and FCF, while taking into account the impact of size by using the 11 Egyptian banks included in the stock market in the period 2009-2019. The study variables can be divided into the independent variable, which is liquidity; the dependent variables, which are NOFC, INF, and FCF; the intermediate variable, which is the size; and the regulatory variables, which are net margin loans, receivables, earning asset, and enterprise value. For the data analysis, we rely on descriptive analysis, the group unit root test, the cointegrating equation model, and the ARDL regression model for hypothesis testing. We obtain secondary data from financial statements and reports. We reach the following conclusions: There is a statistically significant positive or negative relationship between liquidity and (operating cash flows during the second slowdown period-investment cash flows before the first slowdown period and during the first slowdown period-financial cash flows during the first slowdown period). During the initial slowdown period, there is a significant negative relationship between financial cash flows and liquidity multiplied by size, which means that size has an impact on the relationship between liquidity and financial cash flows.