Ashfaq Habib

Faculty of Management Sciences, 

University of Poonch Rawalakot, Pakistan

ashfaqhabib@upr.edu.pk

ORCID 0000-0003-0674-496X

The role of sustainable investment practices in maintaining efficient working capital management

Shaista Anwar

Faculty of Business, Liwa College,

AbuDhabi, UAE

shaista.anwar@lc.ac.ae

ORCID 0000-0001-8332-3929

Waleed Hussain

School of Business and Economics,

University Putra Malaysia, Malaysia;

Faculty of Management Sciences,

University of Kotli, Pakistan

waleedhussainw@gmail.com 

ORCID 0009-0002-7419-5261

Veronika Fenyves

University of Debrecen, 

Faculty of Economics and Business

Hungary

fenyves.veronika@econ.unideb.hu

ORCID 0000-0002-8737-0666

Abstract. This study provides a theoretical argument supported by empirical evidence regarding the impact of sustainable investment practices on the working capital management of small- and medium-sized enterprises (SMEs). The study utilizes panel data on SMEs from 2014 to 2022. Cluster regression methodology is employed to assess the influence of sustainable investment practices on a firm’s working capital, with green finance (GF) as a moderating variable. Results revealed that a firm’s sustainable investment practices significantly and negatively affect its working capital. Additionally, the study identified GF as a moderator in the relation between sustainability and working capital. The findings indicated that firms actively engaging in sustainable investment practices are more efficient in managing working capital for their business operations’ long-term sustainability.

Received: June, 2023

1st Revision: January, 2024

Accepted: May, 2024

DOI: 10.14254/2071-8330.2024/17-2/11

JEL Classification: G11, O44, Q01, Q56

Keywords: working capital, sustainability index, green finance, SMEs