How do firms manage liquidity during currency crisis? The case of Turkey

ABSTRACT

This study investigates how the 2018-currency crisis in Turkey, which exacerbated the borrowing costs, has affected the liquidity management of a sample of 186 Turkish listed firms. The results reveal that firms that relied heavily on short-term borrowing before the crisis period have responded to the crisis by reducing short-term borrowing and increasing internal cash. However, investment levels and the use and supply of trade credit have not been changed during the crisis. The results also show that the substitution into internal cash is significantly higher for small firms than for large firms.

JEL CLASSIFICATION:

• G01
• G31
• G32

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No potential conflict of interest was reported by the author(s).

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Notes on contributors

Ismail Kalash

Ismail Kalash is a PhD candidate at Dicle University, Department of Business Administration. His research interests include corporate finance and corporate social responsibility.