Main Article Content
Abstract
Purpose: This research aims to evaluate the challenges companies face in maintaining financial stability through the integrated management of liquidity, capital structure, and risk management. The study examines how these elements interact and impact corporate financial resilience, particularly during periods of global economic uncertainty.
Research Method: The study adopts a qualitative systematic literature review approach, analyzing recent research and theoretical frameworks related to liquidity management, capital structure, and risk management. This method enables a comprehensive examination of how these financial elements contribute to overall corporate stability across various sectors, with a primary focus on the e-commerce industry.
Results and Discussion: The research reveals that effective liquidity management enables companies to meet their short-term obligations while maintaining operational flexibility. A balanced capital structure reduces financial risks, while proactive risk management strategies, such as hedging and diversification, mitigate exposure to market volatility. The integration of these elements allows firms to navigate economic disruptions more effectively. Additionally, the role of technology in enhancing real-time financial decision-making is emphasized as a critical factor in maintaining long-term financial stability.
Implications: The study highlights the practical and managerial importance of adopting an integrated approach to liquidity, capital structure, and risk management. Business leaders are encouraged to leverage digital technologies to enhance financial management practices, ensuring corporate resilience in a rapidly changing global market. Policymakers can also use these insights to inform regulatory frameworks that support the financial stability of various industries.
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References
- Abdelraheem, A. (2024). The effect of capital structure on financial performance. Uncertain Supply Chain Management, 12(3), 1879–1884. https://doi.org/10.5267/j.uscm.2024.2.015
- Ahmed, F., Rahman, M. U., Rehman, H. M., Imran, M., Dunay, A., & Hossain, M. B. (2024). The effects of corporate capital structure on corporate performance in manufacturing companies pursuing an innovation strategy. Heliyon, 10(3). https://doi.org/10.1016/j.heliyon.2024.e24677
- Alhassan, I., & Islam, K. M. A. (2021). Liquidity management and financial performance of listed oil and gas companies in Nigeria. International Journal of Accounting & Finance Review, 8(1), 15–25. https://doi.org/10.46281/ijafr.v8i1.1364
- Almeida, H. (2021). Liquidity management during the COVID-19 pandemic. Asia‐Pacific Journal of Financial Studies, 50(1), 7–24. https://doi.org/10.1111/ajfs.12322
- Anderson, R. (2003). Capital structure, firm liquidity and growth. In Firms’ Investment and Finance Decisions (pp. 270–294). Edward Elgar Publishing. https://doi.org/10.4337/9781781956335.00020
- Anderson, R. W., & Carverhill, A. (2006). Liquidity and capital structure. http://eprints.lse.ac.uk/id/eprint/24632
- Balicka, H. (2023). Digital technologies in the accounting information system supporting decision-making processes. Zeszyty Naukowe. Organizacja i Zarządzanie/Politechnika Śląska. https://doi.org/10.29119/1641-3466.2023.169.4
- Barry, J. W., Campello, M., Graham, J. R., & Ma, Y. (2022). Corporate flexibility in a time of crisis. Journal of Financial Economics, 144(3), 780–806. https://doi.org/https://doi.org/10.1016/j.jfineco.2022.03.003
- Bartram, S. M. (2019). Corporate hedging and speculation with derivatives. Journal of Corporate Finance, 57, 9–34. https://doi.org/https://doi.org/10.1016/j.jcorpfin.2017.09.023
- Belás, J., Mišanková, M., Schönfeld, J., & Gavurová, B. (2017). Credit risk management: financial safety and sustainability aspects. Journal of Security and Sustainability Issues. https://doi.org/10.9770/jssi.2017.6.1(7)
- Botta, M. (2020). Financial crises, debt overhang, and firm growth in transition economies. Applied Economics, 52(40), 4333–4350. https://doi.org/10.1080/00036846.2020.1734184
- Chorafas, D. N. (2002). Liabilities, liquidity, and cash management: Balancing financial risks. John Wiley & Sons.
- Crockett, A. (1996). The theory and practice of financial stability. De Economist, 144(4), 531–568. https://doi.org/10.1007/BF01371939
- D’Orazio, P. (2023). Navigating financial stability through the dual challenges of climate change and pandemics. Current Opinion in Environmental Sustainability, 65, 101386. https://doi.org/https://doi.org/10.1016/j.cosust.2023.101386
- Dogru, T., Marchio, E. A., Bulut, U., & Suess, C. (2019). Climate change: Vulnerability and resilience of tourism and the entire economy. Tourism Management, 72, 292–305. https://doi.org/https://doi.org/10.1016/j.tourman.2018.12.010
- Etemad, H. (2020). Managing uncertain consequences of a global crisis: SMEs encountering adversities, losses, and new opportunities. Journal of International Entrepreneurship, 18(2), 125–144. https://doi.org/10.1007/s10843-020-00279-z
- Fairhurst, D. (2014). Financial flexibility and short-term financing needs: Evidence from seasonal firms. The University of Arizona.
- Flammer, C., & Ioannou, I. (2021). Strategic management during the financial crisis: How firms adjust their strategic investments in response to credit market disruptions. Strategic Management Journal, 42(7), 1275–1298. https://doi.org/10.1002/smj.3265
- Frank, M. Z., & Goyal, V. K. (2008). Chapter 12 - Trade-Off and Pecking Order Theories of Debt**We thank Long Chen, Sudipto Dasgupta, Espen Eckbo, Chris Hennessy, Jay Ritter, Michael Roberts, Tan Wang, and Jaime Zender for comments and helpful discussions. Murray Frank thanks Piper Jaffray for financial support. Vidhan Goyal thanks the Research Grants Council of the Hong Kong Special Administrative Region for financial support (Project No. 6489/06H). The literature on capital structure is vast, containing hundreds of papers, and so we cannot hope to cover it all. Inevitably, we have left out a great deal, much of it very important. As such, we apologize in advance for our inevitable oversights. Even more than usual, it must be stressed that this survey reflects only our views. In B. E. B. T.-H. of E. C. F. Eckbo (Ed.), Handbooks in Finance (pp. 135–202). Elsevier. https://doi.org/https://doi.org/10.1016/B978-0-444-53265-7.50004-4
- Froot, K. A., & Stein, J. C. (1998). Risk management, capital budgeting, and capital structure policy for financial institutions: An integrated approach. Journal of Financial Economics, 47(1), 55–82. https://doi.org/https://doi.org/10.1016/S0304-405X(97)00037-8
- Fu, Y., He, F., Li, J., & Zan, B. (2024). Commonality in liquidity and corporate default risk-Evidence from China. Research in International Business and Finance, 69, 102280. https://doi.org/10.1016/j.ribaf.2024.102280
- Hajiyev, N., Abdullayeva, S., & Abdullayeva, E. (2024). Financial stability strategies for oil companies amidst high volatility in the global oil products market. Energy Strategy Reviews, 53, 101377. https://doi.org/10.1016/j.esr.2024.101377
- Hill, N. C., & Sartoris, W. L. (1988). Short-term financial management. Macmillan.
- Hofmann, E., Töyli, J., & Solakivi, T. (2022). Working capital behavior of firms during an economic downturn: an analysis of the financial crisis era. International Journal of Financial Studies, 10(3), 55. https://doi.org/10.3390/ijfs10030055
- Hopkin, P. (2018). Fundamentals of risk management: understanding, evaluating and implementing effective risk management. Kogan Page Publishers.
- Hugonnier, J., & Morellec, E. (2017). Bank capital, liquid reserves, and insolvency risk. Journal of Financial Economics, 125(2), 266–285. https://doi.org/https://doi.org/10.1016/j.jfineco.2017.05.006
- Iriani, N., Agustianti, A., Sucianti, R., Rahman, A., & Putera, W. (2024). Understanding Risk and Uncertainty Management: A Qualitative Inquiry into Developing Business Strategies Amidst Global Economic Shifts, Government Policies, and Market Volatility. Golden Ratio of Finance Management, 4(2), 62–77. https://doi.org/10.52970/grfm.v4i2.444
- Ismail, R. (2016). Impact of liquidity management on profitability of Pakistani firms: A case of KSE-100 Index. International Journal of Innovation and Applied Studies, 14(2), 304. https://www.academia.edu/download/41002808/IJIAS-15-285-03.pdf.
- Jerry, R. H. (2023). Understanding Parametric Insurance: A Potential Tool to Help Manage Pandemic Risk BT - Covid-19 and Insurance (M. L. Muñoz Paredes & A. Tarasiuk (eds.); pp. 17–62). Springer International Publishing. https://doi.org/10.1007/978-3-031-13753-2_2
- Koh, W. C., Kose, M. A., Nagle, P. S. O., Ohnsorge, F., & Sugawara, N. (2020). Debt and financial crises. https://ssrn.com/abstract=3547375
- Kouvelis, P., Dong, L., Boyabatli, O., & Li, R. (2011). Handbook of integrated risk management in global supply chains. John Wiley & Sons.
- Mazanec, J. (2023). Capital Structure and Corporate Performance: An Empirical Analysis from Central Europe. Mathematics, 11(9), 2095. https://doi.org/10.3390/math11092095
- Nguyen, L. T. M., & Hoang Dinh, P. (2021). Ex-ante risk management and financial stability during the COVID-19 pandemic: a study of Vietnamese firms. China Finance Review International, 11(3), 349–371. https://doi.org/10.1108/CFRI-12-2020-0177
- Nguyen, L. T. M., Le, D., Vu, K. T., & Tran, T. K. (2023). The role of capital structure management in maintaining the financial stability of hotel firms during the pandemic—A global investigation. International Journal of Hospitality Management, 109, 103366. https://doi.org/10.1016/j.ijhm.2022.103366
- Nukala, V. B., & Prasada Rao, S. S. (2021). Role of debt-to-equity ratio in project investment valuation, assessing risk and return in capital markets. Future Business Journal, 7(1), 13. https://doi.org/10.1186/s43093-021-00058-9
- Obadire, A. M., Moyo, V., & Munzhelele, N. F. (2023). An empirical analysis of the dynamics influencing bank capital structure in Africa. International Journal of Financial Studies, 11(4), 127. https://doi.org/10.3390/ijfs11040127
- Panchal, S., & Chand, S. (2023). Impact of Capital Structure on Firm Performance: Empirical Evidence from Indian Manufacturing Sector. Global Business Review, 09721509231213235. https://doi.org/10.1177/09721509231213235
- Panjaitan, F. R., Minan, H. K., & Arief, M. (2023). The effect of liquidity, profitability, and company size on company value, with capital structure as an intervening variable in manufacturing companies listed on the IDX in 2016-2020. International Journal of Economics and Management, 1(01), 21–32. https://doi.org/10.54209/iem.v1i01.3
- Patel, A., Sorokina, N., & Thornton Jr, J. H. (2022). Liquidity and bank capital structure. Journal of Financial Stability, 62, 101038. https://doi.org/10.1016/j.jfs.2022.101038
- Rao, P., Kumar, S., & Madhavan, V. (2019). A study on factors driving the capital structure decisions of small and medium enterprises (SMEs) in India. IIMB Management Review, 31(1), 37–50. https://doi.org/https://doi.org/10.1016/j.iimb.2018.08.010
- Rasmussen, J., & Suedung, I. (2000). Proactive risk management in a dynamic society. Swedish Rescue Services Agency.
- Ruozi, R., Ferrari, P., Ruozi, R., & Ferrari, P. (2013). Liquidity risk management in banks: economic and regulatory issues. Springer.
- Schularick, M. (2022). Leveraged: The New Economics of Debt and Financial Fragility. University of Chicago Press.
- Sheffi, Y. (2015). The power of resilience: How the best companies manage the unexpected. mit Press.
- Sukmawardini, D., & Ardiansari, A. (2018). The influence of institutional ownership, profitability, liquidity, dividend policy, debt policy on firm value. Management Analysis Journal, 7(2), 211–222.
- Utz, R., Feyen, E., Vazquez Ahued, F., Nie, O., & Moon, J. (2020). Macro-Financial Implications of the COVID-19 Pandemic.
- Venkat, S., & Baird, S. (2016). Liquidity risk management: a practitioner’s perspective. John Wiley & Sons.
- Wang, R. (2024). Safeguarding Enterprise Prosperity: An In-depth Analysis of Financial Management Strategies. Journal of the Knowledge Economy. https://doi.org/10.1007/s13132-024-01752-z
- Wu, N., Zhao, J., Musah, M., Ma, Z., Zhang, L., Zhou, Y., Su, Y., Agyemang, J. K., Asiamah, J. A., & Cao, S. (2023). Do Liquidity and Capital Structure Predict Firms’ Financial Sustainability? A Panel Data Analysis on Quoted Non-Financial Establishments in Ghana. Sustainability, 15(3), 2240. https://doi.org/10.3390/su15032240
- Yang, C. (2023). Impact of Covid-19 on the capital structure of UK firms. University of Glasgow. https://theses.gla.ac.uk/id/eprint/83727
- Zekos, G. I. (2021). Risk Management Developments BT - Economics and Law of Artificial Intelligence: Finance, Economic Impacts, Risk Management and Governance (G. I. Zekos (ed.); pp. 147–232). Springer International Publishing. https://doi.org/10.1007/978-3-030-64254-9_5
References
Abdelraheem, A. (2024). The effect of capital structure on financial performance. Uncertain Supply Chain Management, 12(3), 1879–1884. https://doi.org/10.5267/j.uscm.2024.2.015
Ahmed, F., Rahman, M. U., Rehman, H. M., Imran, M., Dunay, A., & Hossain, M. B. (2024). The effects of corporate capital structure on corporate performance in manufacturing companies pursuing an innovation strategy. Heliyon, 10(3). https://doi.org/10.1016/j.heliyon.2024.e24677
Alhassan, I., & Islam, K. M. A. (2021). Liquidity management and financial performance of listed oil and gas companies in Nigeria. International Journal of Accounting & Finance Review, 8(1), 15–25. https://doi.org/10.46281/ijafr.v8i1.1364
Almeida, H. (2021). Liquidity management during the COVID-19 pandemic. Asia‐Pacific Journal of Financial Studies, 50(1), 7–24. https://doi.org/10.1111/ajfs.12322
Anderson, R. (2003). Capital structure, firm liquidity and growth. In Firms’ Investment and Finance Decisions (pp. 270–294). Edward Elgar Publishing. https://doi.org/10.4337/9781781956335.00020
Anderson, R. W., & Carverhill, A. (2006). Liquidity and capital structure. http://eprints.lse.ac.uk/id/eprint/24632
Balicka, H. (2023). Digital technologies in the accounting information system supporting decision-making processes. Zeszyty Naukowe. Organizacja i Zarządzanie/Politechnika Śląska. https://doi.org/10.29119/1641-3466.2023.169.4
Barry, J. W., Campello, M., Graham, J. R., & Ma, Y. (2022). Corporate flexibility in a time of crisis. Journal of Financial Economics, 144(3), 780–806. https://doi.org/https://doi.org/10.1016/j.jfineco.2022.03.003
Bartram, S. M. (2019). Corporate hedging and speculation with derivatives. Journal of Corporate Finance, 57, 9–34. https://doi.org/https://doi.org/10.1016/j.jcorpfin.2017.09.023
Belás, J., Mišanková, M., Schönfeld, J., & Gavurová, B. (2017). Credit risk management: financial safety and sustainability aspects. Journal of Security and Sustainability Issues. https://doi.org/10.9770/jssi.2017.6.1(7)
Botta, M. (2020). Financial crises, debt overhang, and firm growth in transition economies. Applied Economics, 52(40), 4333–4350. https://doi.org/10.1080/00036846.2020.1734184
Chorafas, D. N. (2002). Liabilities, liquidity, and cash management: Balancing financial risks. John Wiley & Sons.
Crockett, A. (1996). The theory and practice of financial stability. De Economist, 144(4), 531–568. https://doi.org/10.1007/BF01371939
D’Orazio, P. (2023). Navigating financial stability through the dual challenges of climate change and pandemics. Current Opinion in Environmental Sustainability, 65, 101386. https://doi.org/https://doi.org/10.1016/j.cosust.2023.101386
Dogru, T., Marchio, E. A., Bulut, U., & Suess, C. (2019). Climate change: Vulnerability and resilience of tourism and the entire economy. Tourism Management, 72, 292–305. https://doi.org/https://doi.org/10.1016/j.tourman.2018.12.010
Etemad, H. (2020). Managing uncertain consequences of a global crisis: SMEs encountering adversities, losses, and new opportunities. Journal of International Entrepreneurship, 18(2), 125–144. https://doi.org/10.1007/s10843-020-00279-z
Fairhurst, D. (2014). Financial flexibility and short-term financing needs: Evidence from seasonal firms. The University of Arizona.
Flammer, C., & Ioannou, I. (2021). Strategic management during the financial crisis: How firms adjust their strategic investments in response to credit market disruptions. Strategic Management Journal, 42(7), 1275–1298. https://doi.org/10.1002/smj.3265
Frank, M. Z., & Goyal, V. K. (2008). Chapter 12 - Trade-Off and Pecking Order Theories of Debt**We thank Long Chen, Sudipto Dasgupta, Espen Eckbo, Chris Hennessy, Jay Ritter, Michael Roberts, Tan Wang, and Jaime Zender for comments and helpful discussions. Murray Frank thanks Piper Jaffray for financial support. Vidhan Goyal thanks the Research Grants Council of the Hong Kong Special Administrative Region for financial support (Project No. 6489/06H). The literature on capital structure is vast, containing hundreds of papers, and so we cannot hope to cover it all. Inevitably, we have left out a great deal, much of it very important. As such, we apologize in advance for our inevitable oversights. Even more than usual, it must be stressed that this survey reflects only our views. In B. E. B. T.-H. of E. C. F. Eckbo (Ed.), Handbooks in Finance (pp. 135–202). Elsevier. https://doi.org/https://doi.org/10.1016/B978-0-444-53265-7.50004-4
Froot, K. A., & Stein, J. C. (1998). Risk management, capital budgeting, and capital structure policy for financial institutions: An integrated approach. Journal of Financial Economics, 47(1), 55–82. https://doi.org/https://doi.org/10.1016/S0304-405X(97)00037-8
Fu, Y., He, F., Li, J., & Zan, B. (2024). Commonality in liquidity and corporate default risk-Evidence from China. Research in International Business and Finance, 69, 102280. https://doi.org/10.1016/j.ribaf.2024.102280
Hajiyev, N., Abdullayeva, S., & Abdullayeva, E. (2024). Financial stability strategies for oil companies amidst high volatility in the global oil products market. Energy Strategy Reviews, 53, 101377. https://doi.org/10.1016/j.esr.2024.101377
Hill, N. C., & Sartoris, W. L. (1988). Short-term financial management. Macmillan.
Hofmann, E., Töyli, J., & Solakivi, T. (2022). Working capital behavior of firms during an economic downturn: an analysis of the financial crisis era. International Journal of Financial Studies, 10(3), 55. https://doi.org/10.3390/ijfs10030055
Hopkin, P. (2018). Fundamentals of risk management: understanding, evaluating and implementing effective risk management. Kogan Page Publishers.
Hugonnier, J., & Morellec, E. (2017). Bank capital, liquid reserves, and insolvency risk. Journal of Financial Economics, 125(2), 266–285. https://doi.org/https://doi.org/10.1016/j.jfineco.2017.05.006
Iriani, N., Agustianti, A., Sucianti, R., Rahman, A., & Putera, W. (2024). Understanding Risk and Uncertainty Management: A Qualitative Inquiry into Developing Business Strategies Amidst Global Economic Shifts, Government Policies, and Market Volatility. Golden Ratio of Finance Management, 4(2), 62–77. https://doi.org/10.52970/grfm.v4i2.444
Ismail, R. (2016). Impact of liquidity management on profitability of Pakistani firms: A case of KSE-100 Index. International Journal of Innovation and Applied Studies, 14(2), 304. https://www.academia.edu/download/41002808/IJIAS-15-285-03.pdf.
Jerry, R. H. (2023). Understanding Parametric Insurance: A Potential Tool to Help Manage Pandemic Risk BT - Covid-19 and Insurance (M. L. Muñoz Paredes & A. Tarasiuk (eds.); pp. 17–62). Springer International Publishing. https://doi.org/10.1007/978-3-031-13753-2_2
Koh, W. C., Kose, M. A., Nagle, P. S. O., Ohnsorge, F., & Sugawara, N. (2020). Debt and financial crises. https://ssrn.com/abstract=3547375
Kouvelis, P., Dong, L., Boyabatli, O., & Li, R. (2011). Handbook of integrated risk management in global supply chains. John Wiley & Sons.
Mazanec, J. (2023). Capital Structure and Corporate Performance: An Empirical Analysis from Central Europe. Mathematics, 11(9), 2095. https://doi.org/10.3390/math11092095
Nguyen, L. T. M., & Hoang Dinh, P. (2021). Ex-ante risk management and financial stability during the COVID-19 pandemic: a study of Vietnamese firms. China Finance Review International, 11(3), 349–371. https://doi.org/10.1108/CFRI-12-2020-0177
Nguyen, L. T. M., Le, D., Vu, K. T., & Tran, T. K. (2023). The role of capital structure management in maintaining the financial stability of hotel firms during the pandemic—A global investigation. International Journal of Hospitality Management, 109, 103366. https://doi.org/10.1016/j.ijhm.2022.103366
Nukala, V. B., & Prasada Rao, S. S. (2021). Role of debt-to-equity ratio in project investment valuation, assessing risk and return in capital markets. Future Business Journal, 7(1), 13. https://doi.org/10.1186/s43093-021-00058-9
Obadire, A. M., Moyo, V., & Munzhelele, N. F. (2023). An empirical analysis of the dynamics influencing bank capital structure in Africa. International Journal of Financial Studies, 11(4), 127. https://doi.org/10.3390/ijfs11040127
Panchal, S., & Chand, S. (2023). Impact of Capital Structure on Firm Performance: Empirical Evidence from Indian Manufacturing Sector. Global Business Review, 09721509231213235. https://doi.org/10.1177/09721509231213235
Panjaitan, F. R., Minan, H. K., & Arief, M. (2023). The effect of liquidity, profitability, and company size on company value, with capital structure as an intervening variable in manufacturing companies listed on the IDX in 2016-2020. International Journal of Economics and Management, 1(01), 21–32. https://doi.org/10.54209/iem.v1i01.3
Patel, A., Sorokina, N., & Thornton Jr, J. H. (2022). Liquidity and bank capital structure. Journal of Financial Stability, 62, 101038. https://doi.org/10.1016/j.jfs.2022.101038
Rao, P., Kumar, S., & Madhavan, V. (2019). A study on factors driving the capital structure decisions of small and medium enterprises (SMEs) in India. IIMB Management Review, 31(1), 37–50. https://doi.org/https://doi.org/10.1016/j.iimb.2018.08.010
Rasmussen, J., & Suedung, I. (2000). Proactive risk management in a dynamic society. Swedish Rescue Services Agency.
Ruozi, R., Ferrari, P., Ruozi, R., & Ferrari, P. (2013). Liquidity risk management in banks: economic and regulatory issues. Springer.
Schularick, M. (2022). Leveraged: The New Economics of Debt and Financial Fragility. University of Chicago Press.
Sheffi, Y. (2015). The power of resilience: How the best companies manage the unexpected. mit Press.
Sukmawardini, D., & Ardiansari, A. (2018). The influence of institutional ownership, profitability, liquidity, dividend policy, debt policy on firm value. Management Analysis Journal, 7(2), 211–222.
Utz, R., Feyen, E., Vazquez Ahued, F., Nie, O., & Moon, J. (2020). Macro-Financial Implications of the COVID-19 Pandemic.
Venkat, S., & Baird, S. (2016). Liquidity risk management: a practitioner’s perspective. John Wiley & Sons.
Wang, R. (2024). Safeguarding Enterprise Prosperity: An In-depth Analysis of Financial Management Strategies. Journal of the Knowledge Economy. https://doi.org/10.1007/s13132-024-01752-z
Wu, N., Zhao, J., Musah, M., Ma, Z., Zhang, L., Zhou, Y., Su, Y., Agyemang, J. K., Asiamah, J. A., & Cao, S. (2023). Do Liquidity and Capital Structure Predict Firms’ Financial Sustainability? A Panel Data Analysis on Quoted Non-Financial Establishments in Ghana. Sustainability, 15(3), 2240. https://doi.org/10.3390/su15032240
Yang, C. (2023). Impact of Covid-19 on the capital structure of UK firms. University of Glasgow. https://theses.gla.ac.uk/id/eprint/83727
Zekos, G. I. (2021). Risk Management Developments BT - Economics and Law of Artificial Intelligence: Finance, Economic Impacts, Risk Management and Governance (G. I. Zekos (ed.); pp. 147–232). Springer International Publishing. https://doi.org/10.1007/978-3-030-64254-9_5