Vol. 11 No. 3 (2023): Business & Management Studies: An International Journal
Articles

The impact of economic policy uncertainty on cash ratios: An application on BIST 100 index firms

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  • Burcu Dinçergök
Burcu Dinçergök
Assoc. Prof. Dr., Atılım University, Ankara, Türkiye
DOI: https://doi.org/10.15295/bmij.v11i3.2277

Published 2023-09-24

Keywords

  • Ekonomi Politikası Belirsizliği, Nakit Tutma, Finansal Kısıtlar, Panel Veri Analizi
  • Economic Policy Uncertainty, Cash Holdings, Financial Constraints, Panel Data Analysis

How to Cite

Dinçergök, B. (2023). The impact of economic policy uncertainty on cash ratios: An application on BIST 100 index firms. Business & Management Studies: An International Journal, 11(3), 1206–1225. https://doi.org/10.15295/bmij.v11i3.2277

Copyright (c) 2023 Burcu Dinçergök

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Abstract

This study aims to investigate the relationship between economic policy uncertainty and firms' cash ratios and ascertain the role of financial constraints on this relationship. The study was conducted with panel data analysis using the companies' data included in the BIST100 index in the 2002-2021 period. Uncertainty indices used are World Uncertainty Index, European Uncertainty Index, and Turkey Uncertainty Index, respectively. The study's results show that for all of the indices used in the study, the increase in all uncertainty indices increases the cash ratios. The precautionary motive of holding cash explains the results. Besides, the firms are grouped according to their financial constraints. Groupings are based on Kaplan and Zingales (1995) index, whether firms pay dividends or not and the payout ratios. Contrary to the theoretical expectations, the results are positive and statistically significant only for firms with less financial constraints.

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