Economic uncertainty and working capital management: evidence from Turkey

Topçu G.

International Journal of Economic Policy in Emerging Economies, vol.18, no.1, pp.4-22, 2023 (Scopus) identifier

  • Publication Type: Article / Abstract
  • Volume: 18 Issue: 1
  • Publication Date: 2023
  • Doi Number: 10.1504/ijepee.2023.134812
  • Journal Name: International Journal of Economic Policy in Emerging Economies
  • Journal Indexes: Scopus, International Bibliography of Social Sciences, CAB Abstracts, EconLit
  • Page Numbers: pp.4-22
  • Keywords: economic policy, efficiency, liquidity, panel data, Turkey, uncertainty, working capital
  • Çanakkale Onsekiz Mart University Affiliated: Yes


The purpose of this paper is to examine the impact of economic uncertainty on the working capital management (WCM) of 96 Borsa Istanbul (BIST)-listed manufacturing firms from 2005Q1 to 2020Q4. A novel economic policy uncertainty (EPU) index for Turkey was used to measure economic uncertainty, and the cash conversion cycle (CCC) was used to measure WCM. Panel data were analysed, and the parameters of regression equations were estimated using fixed or random effects methods. The empirical results obtained indicate that EPU has a negative impact on working capital (WC) efficiency. Specifically, EPU has a significant and increasing impact on the CCC and its components, and the decrease in WC efficiency is demand related. To enhance WC efficiency, managers should maintain credit facilities, better manage the demand side, extend supplier payments, insure credits and reduce accumulated debts.