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Stochastic frontier modelling of working capital efficiency across Europe

Afrifa, Godfred Adjapong, Tingbani, Ishmael, Adesina, Oluseyi Oluseun (2022) Stochastic frontier modelling of working capital efficiency across Europe. Technological Forecasting and Social Change, 184 . Article Number 122012. ISSN 0040-1625. (doi:10.1016/j.techfore.2022.122012) (KAR id:97079)


This paper adopts the stochastic frontier analysis (SFA) to model working capital efficiency (WCE) on a sample of 6170 European firms from 2009 to 2018. We find: (i) larger firms are more efficient with their working capital management (WCM) than smaller firms, (ii) higher cash holding contributes to WCE, (iii) high competition is less conducive to WCE than low competition, (iv) export and sales growth potential decrease WCE and (v) WCE increases with access to bank credit. In the analysis, a distinction is made between the “old” EU countries and the “new” EU countries. The results are sensitive to the year of admission into the EU. The results are robust to omitted variable bias, using a more novel approach.

Item Type: Article
DOI/Identification number: 10.1016/j.techfore.2022.122012
Uncontrolled keywords: Working capital efficiency, Working capital management, Determinants of WCE, Inventory, Trade receivables, Trade payables, Stochastic frontier analysis
Subjects: H Social Sciences
Divisions: Divisions > Kent Business School - Division > Department of Accounting and Finance
Funders: University of Kent (
Depositing User: Godfred Afrifa
Date Deposited: 23 Sep 2022 13:37 UTC
Last Modified: 04 Jul 2023 11:13 UTC
Resource URI: (The current URI for this page, for reference purposes)

University of Kent Author Information

Afrifa, Godfred Adjapong.

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