Origin and Development of Financial Flexibility: A Systematic Literature Review

In the past 30 years, especially in the 1990s, financial flexibility has aroused great interest among researchers. Financial flexibility has always been regarded as one of the most important driving forces for capital structure decision-making, and after 20 years of exploration, there has been a significant increase in literature related to financial flexibility. Financial flexibility refers to the extent to which financial resources can support a company’s ability to survive and seize opportunities in the face of environmental changes, as well as the debt capacity reserved by the company for timely acquisition or use of financial resources in the future. Nowadays, financial flexibility has been applied in various business fields, including finance, management, organizational environment, and corporate governance. It has also gained strong application scope in different industry fields, including manufacturing, service, information technology, and banking. At present, research on financial flexibility mainly focuses on two aspects: financial flexibility and investment capability, and financial flexibility and corporate performance. There are still many research gaps that need to be supplemented by researchers.