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Return to Profitabiolity after a Financial Crisis

Author

Listed:
  • Dev Prasad
  • Yash R. Puri
  • Ravi Jain

Abstract

The financial crisis in October 2007 that sent the stock markets in a downward spiral all around the globe started more than six years ago. Many countries are still experiencing the ripple effects despite intervention by several governments, acting singly and collectively, to help stem the crisis and support recovery. Yet, many firms around the globe have not firmly returned to profitability. This study, therefore, addresses the question: When do firms return to profitability after a financial crisis? and examines the time taken by industrial firms in three of the hardest hit Asian countries to return to profitability after the 1997 Asian financial crisis. Earlier studies at the ‘micro’ level has mainly focused on the profitability of financial institutions and generally been limited to the pre-crisis period and/ or a few years of the postcrisis period. This paper takes a longer perspective of the post-crisis period and focuses. The results show that, in each country, there are significant differences in the profitability of industrial firms in the shortterm before and after the crisis as well as in the longer-term post-crisis period. Further, the speed of recovery and the extent of the return to profitability vary from country to country.

Suggested Citation

  • Dev Prasad & Yash R. Puri & Ravi Jain, 2015. "Return to Profitabiolity after a Financial Crisis," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 9(1), pages 89-101.
    • Handle: RePEc:ibf:ijbfre:v:9:y:2015:i:1:p:89-101
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Financial Crisis; Profitability; Asia; Ratios;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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