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Abstract
This study seeks to assess the working capital management of commercial banks in Afghanistan. Time series data from 2012 to 2017 have been extracted from the financial statement of the banks, and descriptive statistics, financial analysis techniques and ratios, correlation analysis and regression have been used to determine how working capital affect profitability. Contrary to most previous empirical works, the findings of this study show that working capital management effectively influences the profitability of commercial banks. Equity capital growth has a significantly positive relationship with banks profitability (Return on Equity) whiles working capital, and short-term debt exhibits a significantly negative relationship with the bank’s profitability only in three banks (Azizi Bank, First Micro Finance Bank, and Maiwand Bank) and its insignificant in case of other banks.
Keywords
Abstract
This study seeks to assess the working capital management of commercial banks in Afghanistan. Time series data from 2012 to 2017 have been extracted from the financial statement of the banks, and descriptive statistics, financial analysis techniques and ratios, correlation analysis and regression have been used to determine how working capital affect profitability. Contrary to most previous empirical works, the findings of this study show that working capital management effectively influences the profitability of commercial banks. Equity capital growth has a significantly positive relationship with banks profitability (Return on Equity) whiles working capital, and short-term debt exhibits a significantly negative relationship with the bank’s profitability only in three banks (Azizi Bank, First Micro Finance Bank, and Maiwand Bank) and its insignificant in case of other banks.
Keywords
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- from 1996-2005, the authors observe a significantly negative relationship between net operating
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- collection and loan disbursement. Financial statements for the last six fiscal years from 2012 to
- 2017 have been taken for evaluating working capital management. These include: 1) Aziz Bank 2) Afghanistan International Bank (AIB) 3) Islamic Bank of Afghanistan (IBAFG formerly Bakhter Bank) 4) First Micro Finance Bank (FMFB) 5) Afghan United Bank (AUB) 6) Ghazanfar Bank 7) Arian Bank 8) Maiwand Bank
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