Cash flow volatility and financial stability: Evidence from insurance and non-financial firms in Jordan
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Author(s)Mohammad Fawzi ShubitaLink to ORCID Index: https://orcid.org/0000-0001-7389-2108
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Moade Fawzi ShubitaLink to ORCID Index: https://orcid.org/0000-0002-1465-9047
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Mohamad SaadLink to ORCID Index: https://orcid.org/0000-0002-3337-2076
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Mohammad Ahmad AlqamLink to ORCID Index: https://orcid.org/0000-0003-0103-9719
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Dua’a ShubitaLink to ORCID Index: https://orcid.org/0000-0002-6333-8784
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DOIhttp://dx.doi.org/10.21511/ins.17(2).2026.03
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Article InfoVolume 17 2026, Issue #2, pp. 26-37
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Creative Commons Attribution 4.0 International License
Type of the article: Research Article
Abstract
Cash flow volatility is an important source of financial uncertainty because unstable operating cash flows may weaken firms’ ability to meet obligations, sustain investment, and preserve financial flexibility. This issue is particularly relevant in emerging markets, where firms often face financing constraints and sectoral structure may shape financial stability differently. This study examines the relationship between cash flow volatility and financial stability in Jordanian listed firms and investigates whether the insurance sector responds differently to operating cash flow uncertainty compared with other non-financial firms. Financial stability is measured using the Z-score, while cash flow volatility is calculated as the rolling standard deviation of operating cash flow scaled by average total assets. The analysis uses panel data for Jordanian listed firms over 2014–2024. A three-year rolling window is applied in the baseline model, while a five-year rolling window is used as a robustness check. The regression model includes an interaction term between cash flow volatility and an insurance-sector dummy, along with firm size, leverage, firm age, and sales growth as control variables. The results indicate statistically weak evidence that the Z-score is negatively associated with cash flow volatility, albeit in a directionally weak one. But this is not statistically significant in the baseline fixed-effects model. Furthermore, the interaction between cash flow volatility and the insurance sector dummy is not statistically significant and has a different sign in one robustness specification. The study therefore does not confirm that insurance firms are structurally less sensitive to cash flow volatility. Leverage remains the most robust determinant of lower financial stability.
Acknowledgment
This research was funded through the annual funding track by the Deanship of Scientific Research, from the vice presidency for graduate studies and scientific research, King Faisal University, Saudi Arabia [Grant No. KFU263523].
- Keywords
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JEL Classification (Paper profile tab)C23, G22, G32, G33
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References39
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Tables8
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Figures0
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- Table 1. Sample distribution by sector and year
- Table 2. Variable definitions and construction
- Table 3. Descriptive statistics for main variables by sector (2016–2024, winsorized)
- Table 4. Pearson correlation matrix (winsorized)
- Table 5. Fixed-effects regressions: Z-score, cash flow volatility, and insurance-sector interaction (2016–2024)
- Table 6. Separate fixed-effects regressions by sector (2016-2024)
- Table 7. Robustness checks and Z-score sensitivity
- Table 8. Hypotheses testing results
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Determinants of financing decision: empirical evidence on manufacturing firms in Indonesia
Sutomo Sutomo , Sugeng Wahyudi ,
Irene Rini Demi Pangestuti ,
Harjum Muharam
doi: http://dx.doi.org/10.21511/imfi.16(2).2019.14
Investment Management and Financial Innovations Volume 16, 2019 Issue #2 pp. 159-170 Views: 3744 Downloads: 749 TO CITE АНОТАЦІЯThis study aims to contribute to the emergence of the literature focusing on exploring the factors influencing the financing decision, as well as examining the relationship between the firm size, profitability and firm growth towards the corporate debt. Questions such as how relevant firm size, profitability and firm growth to debt are, quantitatively, had not been fully answered in the business literature. The purpose of this study is to fill this large gap by examining the role of the firm size, profitability, investment and firm growth for the corporate debt. This study tries to examine the determinants of debt in the financial literature which include size, growth, business risk, and profitability in accordance with the capital structure theory, in manufacturing firms in Indonesia. The sample contained financial data from 150 firms for the period 2012–2017. The results showed that the manufacturing firms in Indonesia had high debt levels, especially the size, profitability, firm growth and profitability had proven to be the debt determinants, which also confirmed the Pecking Order Theory. This study also found that the management preference of manufacturing firms in Indonesia for risk was the risk-seeker or risk-neutral ones. This finding implies that the choice of funding sources originating from debt still provided greater returns compared to the capital cost needed due to business uncertainties.
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Capital structure, firm value and managerial ownership: Evidence from East African countries
Mishelle Doorasamy
doi: http://dx.doi.org/10.21511/imfi.18(1).2021.28
Investment Management and Financial Innovations Volume 18, 2021 Issue #1 pp. 346-356 Views: 3611 Downloads: 2422 TO CITE АНОТАЦІЯEast African firms are experiencing economic growth and are attracting foreign investment in the form of equity capital and loans. However, there are concerns about whether the structure of the capital and managerial ownership of these firms can influence their growth. The study examined the relationship between capital structure and firm value in East African countries and how managerial ownership influences this relationship. Sixty-five (65) listed firms in East Africa were selected for the study. The study employed a GMM estimation technique. The evidence showed that leverage has a significantly negative impact on the value of firms in East Africa, suggesting that higher debt would result in a decrease of firm value. The implication of this result is that firms can increase their value by reducing their leverage level. Moreover, the study found that managerial ownership had an inverse and significant impact on the relationship between leverage and firm value. The conclusion is that leverage decreases the value of firms in East Africa. Another conclusion is that owner-managers can use debt capital more effectively to increase firm value than non-owner managers. The implication of this result is that firms managed by owners can borrow more for their operations because it would increase the value of the firms. This study is the first to examine how managerial ownership moderates the relationship between capital structure and the value of firms in East Africa, which has a unique political, social, cultural and economic environment.
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The role of financial inclusion in financial stability: lesson from Jordan
Mohammad O. Al-Smadi
doi: http://dx.doi.org/10.21511/bbs.13(4).2018.03
Banks and Bank Systems Volume 13, 2018 Issue #4 pp. 31-39 Views: 3371 Downloads: 780 TO CITE АНОТАЦІЯThis study aims to examine the relationship between financial inclusion and financial stability in Jordan by using Fully Modified Least Squares (FMOLS) technique. The analysis is based on time series from 2006 to 2017. Jordanian financial inclusion index is developed to assess the level of financial inclusion, whereas financial stability was measured by Jordanian financial stability index proposed by Central Bank of Jordan. The results show a weak significant and positive impact of financial inclusion on the financial stability in Jordan. Additionally, five control variables are used in the study. The results show a negative impact of domestic credit to private sector, income inequality, financial integration, and global financial crisis on financial stability. In contrast, real GDP per capita has a significant and positive impact. It is expected that the findings of the study can be used by policy makers and supervising authorities to realize the objectives of the national strategy of financial inclusion in Jordan.
