A new empirical approach for balance sheet management effects on performance and financial variables development

Abstract

Purpose

The purpose of this paper is to estimate empirically and by empirical means, the empirical effect of the balance sheet management at the zero lower bound on the interest rate on performance and financial variables.

Design/methodology/approach

The paper has an empirical approach to examine whether the movement in the balance sheet has had a spillover effect on the performance and financial variable. The empirical method used is a “structural panel management,” being appropriate for the analysis. This has never been used in strategic and management development.

Findings

The paper presents the following interesting results: the balance sheet management explains a significant portion of the changes in performance and financial variable during the non-conventional strategy approach; the performance fundamentals as the development and the opening of the financial market deal with the heterogeneity of the business in relation to the responses of the balance sheet shocks; the positive advantage of the balance sheet management may not be profitable in context characterized by low liquidity, low exposure to global markets and low stability of performance fundamentals.

Originality/value

Based on a heterogeneous structural panel data management over a sample spanning the balance sheet management model, the author find some evidence of small cross-border effects on the decline of long-term bond yield, an increase in performance, an increase in the stock market prices, local currency appreciation and increase in credit growth. Yet, the quantile responses show that there is substantial heterogeneity in the Asia pacific business market responses to the governance’s shocks over all response periods. Accordingly, the effects vary across Asia pacific market and are time-varying, depending on their performance fundamentals, exposure to global markets and financial market depth. The balance sheet management on performance and financial variables could be an excellent reference for future researches and practices in Schools of Management and Finances.

Citation

Amedzro St-Hilaire, W. (2019), "A new empirical approach for balance sheet management effects on performance and financial variables development", Journal of Management Development, Vol. 38 No. 10, pp. 812-832. https://doi.org/10.1108/JMD-05-2019-0167