Purpose The purpose of this paper is to provide new insights about investment-cash flow sensitivities (ICFS) as a representative of financial constraints, by examining panel data consisting of 288 listed firms in Pakistan. Design/methodology/approach This study uses a panel data methodology and first difference generalized method of moments to control the problems of heterogeneity and endogeneity. By five different criteria, estimations are made for full and pre-classified sub-samples. Sargan test and Arellano-Bond serial correlation statistic are used for identification and validation of instruments and model. Findings According to the results, the ICFS has increased monotonically with the level of financial constraints. Further, the results depict that ICFS for the constrained group is much higher as compared to the unconstrained group. Overall, the result illustrates positively significant ICFS. Practical implications This study confirms signs of imperfections in the capital market, which leads to financial markets inaccessibility preceded by high under-investment costs and low social and economic development. Thus, proper policy designing and instigation are necessary for the subsidies, taxation, and foreign direct investment and later for financial market development and promotion of private corporate investment. Originality/value Previous studies have mostly focused on developed countries where large listed companies work in well-developed financial markets and do not face severe financial constraints because of the greater market integration (Bekaert et al., 2011, 2013) and superior investor protection laws (Djankov et al., 2008; La porta et al., 1998). However, this study focuses on listed companies from the emerging Pakistani market, which will bring forth the interesting aspects of ICFS and will enhance the existing literature effectively.
has had a drastic impact on every field and walk of life. The long-lasting impacts of this pandemic have changed the way businesses used to be conducted and will have a strong impact on business models as well. The main objective of this qualitative study is to investigate the impact of COVID-19 on restaurants and small stalls of street food vendors in Pakistan and to suggest a way forward. A total of 30 interviews were conducted through conference calls. The findings proved that major issues faced by the restaurants are the massive decline in sales, massive layoffs, no economic activity, and no relief from the government. The major changes required in the existing business models highlighted by the interviewees are proper sanitization, changes in the sitting area, change in menus, and the need for innovative ideas to attract the customers back. The study is useful for the restaurants and street food vendors to help them out in this difficult phase and suggest a way forward to them.
The purpose of this paper is threefold. First, it measures profit efficiency and financial stability of commercial banks of Pakistan. Second, it empirically estimates the effect of the already implemented financial regulations on the profit efficiency and financial stability of banks. Third, it examines the differential effect of financial regulations on profitability and financial soundness across bank size. To carry out the empirical analysis, a balanced bank-level panel data covering the period 2008-2014 is used. To gauge the profit efficiency of commercial banks, Data Envelopment Analysis (DEA) is utilised, while, to proxy the financial soundness, the Z-score is calculated for each bank. The panel regression approach is used to examine the effects of financial regulations on the profit efficiency and financial soundness of banks. We find that the financial regulations enforced by State Bank of Pakistan (SBP) have significant impacts on the profit efficiency and financial stability of banks. The results indicate that the non-performance loans to assets ratio (NPLL) and the reserve ratio (RR) impact positively, whereas, the liquidity ratio (LIQR) and the loans to deposits ratio (LODEPOSIT), significantly and negatively affect the profit efficiency of banks. However, only LR and RR are positively and significant related to the financial stability. The results also suggest that the financial regulations have significant differential effects on the profit efficiency and financial soundness of banks across bank size. JEL Classification: C23, E44, G21, G28 Keywords: Profit Efficiency, Financial Soundness, Financial Regulations, Data Envelopment Analysis, Z-Score, Differential Effects
The study examines the role of the knowledge economy (KE) in Asian businesses in 45 countries for 2000–2019. KE indicators include education, economic incentives, innovation, institutional regime, and information and communication technology. The business indicators used in the study are starting, doing, and closing business. The empirical analysis is carried out by applying principal component analysis (PCA) and instrument variable panel fixed effects estimator. The results proved that the KE indicators are essential to improve businesses in Asia. They help the economies to boost their business sector and help to fight against poverty and unemployment.
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