THE EFFECTS OF EFFECTIVE FINANCIAL MANAGEMENT PRACTICES ON BUSINESS PERFORMANCE

Abstract

This study comprehensively examines the effects of effective financial management practices on business performance. The research addresses various financial management dimensions such as liquidity management, financial risk management, innovation investments and corporate governance practices. The aim of the study is to analyse the effects of these practices on the financial performance of enterprises, to reveal sectoral differences and to evaluate the effects of macroeconomic factors by making cross-country comparisons. The research methodology adopts a mixed approach including both quantitative and qualitative methods. Statistical techniques such as panel data analysis, multiple regression analysis and ANOVA were used for quantitative analyses. Qualitative data were collected through in-depth interviews and case studies. The study covers selected enterprises from manufacturing and finance sectors in Turkey and Indonesia. The findings show that effective financial management practices have an overall positive impact on business performance. In particular, liquidity management, financial risk management and innovation investments are found to have positive effects on the profitability and market capitalisation of enterprises. Sectoral analyses reveal that there are significant differences between manufacturing and financial sectors in terms of the effectiveness of financial management practices. Cross-country comparisons emphasised the significant impact of macroeconomic factors, especially exchange rate volatility, on the financial performance of enterprises.

The study also examined the effects of financial technologies (FinTech) and digital transformation on the financial management strategies of enterprises. The findings show that digital financial innovations and knowledge management practices improve the operational efficiency of enterprises and provide competitive advantage. As a result, this research reveals the critical role of effective financial management practices on business performance. The findings of the study provide important implications for business managers and financial decision makers and suggest new directions for future research. In particular, sustainability-oriented financial management practices and the integration of environmental, social and governance (ESG) factors into financial decisions stand out as potential areas for future research.