The Impact of Liquidity on Profitability during the Financial Crisis Evidence from the Romanian Listed Companies

This study started from the assumption that liquidity and profitability are issues of significant impact on companies' stability and development. In the context of the financial crisis from the last years, liquidity has become an issue of great interest. Recent studies have been generally focused especially on the relationship between market's liquidity and the real economy, and also on the effects that the banking system could generate, as the basis of the entire financial system. In this paper, we did not focused on testing a certain model, but to analyze the correlations between studied variables. The empirical study was conducted by econometric analysis, using multivariate regression models for unbalanced panel data. The analysis was conducted on companies listed on the Bucharest Stock Exchange and included a sample of 50 companies. In order to observe the changes recorded before the crisis and the subsequent evolution, data was collected for a period of 10 years, from 2005 to 2014. Financial performance was approached through accounting measures using return on assets and return on equity. Factors that could influence firm's performance were focused on liquidity and solvency indicators. The results confirmed the statistically significant relationship between the analyzed variables. Also, it has been revealed is a negative correlation between liquidity and corporate financial performance.