Reviewing and investigating the impact of the global financial crisis on the liquid assets of companies

Mahnaz Zhian Nasrolahi¹

1) PhD student in accounting, Islamic Azad University, Tabriz branch,

IOI Code : XHFH-KDFBA
Publication : The first international conference on innovation, growth and development in management, accounting and humanities(icimah.com/1st)
Abstract :
    The global financial crisis was a widespread economic downturn that began in 2008 and was caused by the collapse of the housing and investment banking markets. A financial crisis is a sudden and large collapse in the financial system or the economy in general. Financial assets such as stocks, bonds, and real estate often suffer sudden and large declines in value during financial crises. It can also be identified by declining credit and loss of trust in financial institutions such as banks. A financial crisis can be caused by many factors, including: Excessive leverage: When people, companies, and governments take on too much debt, they run the risk of financial collapse. Asset price bubbles: Rapid increases in the cost of assets such as houses and stocks can lead to sharp price declines, leading to financial crises. Bank performance: When enough customers try to withdraw money from banks at once, financial institutions may go bankrupt and close, causing a financial crisis. Poorly managed financial institutions: Poorly managed financial institutions can go bankrupt or fail, causing financial failure. Economic recession: A financial crisis can be caused by an economic recession, which is defined by a contraction of economic activities and an increase in unemployment. Using a sample of Eastern European companies, this study examines the impact of the global financial crisis on the determinants of companies cash assets and adjustments towards target cash levels. These results, using panel fixed effects and GMM estimates, show that the determinants of liquid assets at the company level are significantly different in the periods before and after the crisis. In addition, the speed of adjustment to achieve the desired level of liquidity in the post-crisis period is significantly lower. Our results are robust against correction for endogeneity. These results have important implications for Eastern European companies, which have been significantly affected by the global financial crisis in terms of lack of liquidity and reduced financial flexibility.

Keywords : cash assets global financial crisis adjustment speed eastern europe