The impact of global economic uncertainty on the capital flow of manufacturing businesses in Vietnam

Abstract

The research aims to investigate the impact of economic policy instability on the working capital turnover of companies. The study sample comprises 113 publicly listed manufacturing companies in the Vietnamese stock market over an 8-year period from 2015 to 2022. Statistical methods including Ordinary Least Squares (OLS), Fixed Effects Model (FEM), Random Effects Model (REM), Feasible Generalized Least Squares (FGLS), and Generalized Method of Moments (GMM) are employed to address quantitative economic issues and enhance the precision of regression coefficients. Experimental results indicate that economic policy instability shortens the cash collection period, cash conversion cycle, inventory holding period, payment period, and cash retention level of businesses. Additionally, the working capital turnover of companies is influenced by factors such as cash flow, leverage, fixed assets, profitability, scale, interbank interest rates, GDP, and inflation. Therefore, this study provides a fresh perspective for managers on how to enhance the company's working capital turnover, ultimately improving profitability."a