The Role of the Availability of Bank Credit in Corporate Working Capital Management

An important subject in financial management is working capital management, which plays an important role in surviving and growing the commercial unit. The main purpose of this study is to evaluation the effects of change in the availability of short term bank dept on corporate working capital management. In this study, the data of 52 active manufacturing companies in the industry sector during the period of 2006 – 2016 in the Tehran Stock Exchange have been used. The panel data quasi-likelihood method was used. The effect of change in short term bank debt on working capital elements such as cash, receivables, inventories and other current assets (prepayments and orders), trade debt (payables) and other current liabilities were studied. The results showed that changes in the availability of bank debt significantly influence a number of aspects of a firm’s working capital policies, and these effects often differ across firms that are more or less dependent on bank debt.