IDEAS home Printed from https://ideas.repec.org/a/lje/journl/v17y2012i1p33-44.html
   My bibliography  Save this article

The Consequences of Easy Credit Policy, High Gearing, and Firms’ Profitability in Pakistan’s Textile Sector: A Panel Data Analysis

Author

Listed:
  • Ijaz Hussain

    (School of Social Sciences, Beaconhouse National University (BNU), Lahore, Pakistan.)

Abstract

This study uses panel data on 75 textile firms for the period 2000–09 to examine the consequences of an easy credit policy followed by high gearing, increased financing costs, and other determinants of corporate profitability. Five out of nine explanatory variables—including gearing, financing costs, inflation, tax provisions, and the industry’s capacity utilization ratio—have a negative impact, while the remaining four variables—working capital management, asset turnover, exports, competitiveness, and devaluation—have a positive impact on firms’ profitability.

Suggested Citation

  • Ijaz Hussain, 2012. "The Consequences of Easy Credit Policy, High Gearing, and Firms’ Profitability in Pakistan’s Textile Sector: A Panel Data Analysis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 17(1), pages 33-44, Jan-June.
    • Handle: RePEc:lje:journl:v:17:y:2012:i:1:p:33-44
    as

    Download full text from publisher

    File URL: http://121.52.153.179/JOURNAL/Vol%2017-1/02%20Ijaz%20Hussain.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
    2. Marco Grazzi, 2009. "Trade and Profitability: Is there an export premium? Evidence from Italian manufacturing firms," LEM Papers Series 2009/16, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    3. Andreas Stierwald, 2010. "Determinants of Profitability: An Analysis of Large Australian Firms," Melbourne Institute Working Paper Series wp2010n03, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    4. Lambson, V.E., 1989. "Industry Evolution With Sunk Costs And Uncertian Market Conditions," Working papers 8904, Wisconsin Madison - Social Systems.
    5. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    6. Raza, Syed Ali & Farooq, M. Shoaib & Khan, Nadeem, 2011. "Firm and industry effects on firm profitability: an empirical analysis of KSE," MPRA Paper 36797, University Library of Munich, Germany.
    7. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
    8. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    9. Imran Omer Chhapra & Nousheen Abbas Naqvi, 2010. "Relationship between Efficiency Level of Working Capital Management and Profitability of Firms in the Textile Sector of Pakistan," Indus Journal of Management & Social Science (IJMSS), Department of Business Administration, vol. 4(1), pages 30-42, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Volker Nocke, 2006. "A Gap for Me: Entrepreneurs and Entry," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 929-956, September.
    2. Fedderke, J.W. & Bogetic, Z., 2009. "Infrastructure and Growth in South Africa: Direct and Indirect Productivity Impacts of 19 Infrastructure Measures," World Development, Elsevier, vol. 37(9), pages 1522-1539, September.
    3. Alfons Palangkaraya & Jongsay Yong, 2006. "Entry, Exit, and Productivity of Indonesian Electronics Manufacturing Plants," Melbourne Institute Working Paper Series wp2006n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    4. Mark J. Roberts & Dylan Supina, 1997. "Output Price and Markup Dispersion in Micro Data: The Roles of Producer Heterogeneity and Noise," NBER Working Papers 6075, National Bureau of Economic Research, Inc.
    5. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372, National Bureau of Economic Research, Inc.
    6. Marcus Asplund & Volker Nocke, 2003. "Firm Turnover in Imperfectly Competitive Markets," PIER Working Paper Archive 03-010, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    7. David Greenstreet, 2007. "Exploiting Sequential Learning to Estimate Establishment-Level Productivity Dynamics and Decision Rules," Economics Series Working Papers 345, University of Oxford, Department of Economics.
    8. Bhattacharjeean, Arnab & Majumdar, Sumit K., 2011. "How much does industry matter in an emerging market economy?," SIRE Discussion Papers 2011-51, Scottish Institute for Research in Economics (SIRE).
    9. Massón Guerra, José Luis, 2007. "El capital empresarial como determinante de la productividad y el crecimiento en España [The Impact of Entrepreneurship Capital on Spanish's Labor Productivity and Economic Growth]," MPRA Paper 4073, University Library of Munich, Germany.
    10. Mark J Roberts & Dylan Supina, 1997. "Output Price And Markup Dispersion In Micro Data: The Roles Of Producer And Heterogeneity And Noise," Working Papers 97-10, Center for Economic Studies, U.S. Census Bureau.
    11. Kox, Henk L.M. & Leeuwen, George van & Wiel, Henry van der, 2010. "Competitive, but too small - productivity and entry-exit determinants in European business services," MPRA Paper 24389, University Library of Munich, Germany.
    12. Kiatipong Ariyapruchya & Cheerapan O-lanthanasate & Chatsurang Karnchanasai, 2006. "Strengthening the Competitiveness of Thai Firms: What Needs to be Done?," Working Papers 2006-03, Monetary Policy Group, Bank of Thailand.
    13. Andersson, Fredrik & Vejsiu, Altin, 2001. "Determinants of plant closures in Swedish manufacturing," Working Paper Series 2001:6, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    14. Daan Freeman & Leon Bettendorf & Gerrit Hugo van Heuvelen & Gerdien Meijerink, 2024. "Business Dynamics and Productivity Growth in the Netherlands," CESifo Working Paper Series 11071, CESifo.
    15. Liu, Lili, 1991. "Entry-exit, learning, and productivity change : evidence from Chile," Policy Research Working Paper Series 769, The World Bank.
    16. Francesco Serti & Chiara Tomasi, 2008. "Self-Selection and Post-Entry Effects of Exports: Evidence from Italian Manufacturing Firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(4), pages 660-694, December.
    17. Viktoria Kocsis & Victoria Shestalova & Henry van der Wiel & Nick Zubanov & Ruslan Lukach & Bert Minne, 2009. "Relation entry, exit and productivity: an overview of recent theoretical and empirical literature," CPB Document 180.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    18. Frode Steen, 2002. "Vertical Industry Linkages: Sources of Productivity Gains and Cumulative Causation?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 21(1), pages 3-20, August.
    19. Giordano, Claire & Lopez-Garcia, Paloma, 2019. "Firm heterogeneity and trade in EU countries: a cross-country analysis," Occasional Paper Series 225, European Central Bank.
    20. Jože P. Damijan & Črt Kostevc & Sašo Polanec, 2010. "From Innovation to Exporting or Vice Versa?," The World Economy, Wiley Blackwell, vol. 33(3), pages 374-398, March.

    More about this item

    Keywords

    Easy credit; energy crisis; corporate profitability; textile sector; panel data; Pakistan.;
    All these keywords.

    JEL classification:

    • L78 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Government Policy
    • L69 - Industrial Organization - - Industry Studies: Manufacturing - - - Other
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lje:journl:v:17:y:2012:i:1:p:33-44. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Shahid Salahuddin (email available below). General contact details of provider: https://edirc.repec.org/data/lsecopk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.