Impact of Working Capital Management on Bank’s Cash Holding Decisions in Pakistan

Abstract

This paper analyses the impact of working capital management on conventional banks’ cash holding decisions in Pakistan. In order to estimate the empirical model, we apply fixed effect estimator for the period from 2006 to 2016. The results show that debtor collection period and cash conversion cycle have negative while the creditor payment period has significant positive impact on cash holdings of conventional banks. Moreover, the profitability, change in cash position, and leverage has significant positive and the size of banks has negative relationship with the cash position of banks while, the growth opportunities do not have any significant impact on the cash holding behavior of banks.