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The selection of financing is a top priority for businesses, particularly in short- and long-term investment decisions. Mixing debt and equity leads to decisions on the financial structure for businesses. This research analyzes the moderate position of company size and the interest rate in the capital structure over six years (2013–2018) for 29 listed Pakistani enterprises operating in the sugar market. This research employed static panel analysis and dynamic panel analysis on linear and nonlinear regression methods. The capital structure included debt to capital ratio, non-current liabilities, plus current liabilities to capital as a dependent variable. Independent variables were profitability, firm size, tangibility, Non-Debt Tax Shield, liquidity, and macroeconomic variables were exchange rates and interest rates. The investigation reported that profitability, firm size, and Non-Debt Tax Shield were significant and negative, while tangibility and interest rates significantly and positively affected debt to capital ratio. This means the sugar sector has greater financial leverage to manage the funding obligations for the better performance of firms. Therefore, the outcomes revealed that the moderators have an important influence on capital structure.

If a country is dependent on one particular export commodity, what exchange rate policy should it follow? Surprisingly, there is no standard textbook prescription for such a country. In theory, rigidly pegging exchange rates to those of the developed economies allow emerging markets to fix the price of tradable goods and import monetary policy credibility leading to greater macroeconomic stability. The corollary being that countries lose their ability to react independently to domestic economic concerns. Nowhere are these macroeconomic policy dilemmas currently more acute than for emerging market oil-exporting economies, with their pegged exchange rates making it difficult to adjust to swings in the high price of crude oil. This paper investigates whether through rigidly fixing the exchange rate it is now the case that the disadvantages associated with importing a monetary policy ill-suited to the need of oil-exporting countries, now outweigh the gains from importing US monetary policy. The results in this paper show that pegged regimes are poor at insulating emerging market commodity-dependent economies from real shocks, in particular terms-of-trade disturbances. Allowing for caveats, the results show that greater macroeconomic stability could be fostered in emerging market oil-exporting economies by allowing for greater flexibility in their exchange rate regimes.

We investigate the impact of government borrowing from the scheduled banks on the credit to private sector in Pakistan, using monthly data from 1998:M6 to 2015:M12. We find that a one percentage point growth in the government borrowing leads to 8 basis points crowding out of the private sector credit in four months. Albeit small, there is negative impact of government borrowing on the private sector credit. The results remain unchanged even after implementation of the interest rate corridor since August 2009.

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