Modeling the Impact of Corporate Risk Management on Firms’ Financial Performance and Sustainable Growth

Abstract

Growing complexities in the indigence and global business environment, the demand for Corporate Risk Management (CRM) has fostered greatly. Equally, Financial Performance (FP) and Sustainable Growth Rate (SGR) are believed to be vital parameters for assessing any organisation's success. Both FP and SGR are get affected by different risks. Therefore, to the best of our knowledge, this paper is the first endeavour meant to empirically shed light on the Impact of CRM on a firm’s FP and SGR. By taking a sample of 160 listed Non-Financial firms from emerging and developed Countries stocks markets, on the bases of market capitalization, covering a period of 12 years (2007-2018). The CRM index has been constructed by using the Principal Component Analysis technique. Panel data fixed-effect Model applied on the bases of Hausman test. The results articulated that CRM has a significant and positive impact on ROE and SGR in the context of both cases. In contrast, inflation negatively relates to both scenarios, but the size and Gross Domestic Product (GDP) have a positive and significant relationship with ROE and SGR. However, in Pakistan's case, Size and GDP have articulated adverse effect on ROE and SGR.

Digital inclusive finance, industrial structure, and economic growth: An empirical analysis of Beijing-Tianjin-Hebei region in China

“…Replace core explanatory variables. Replacing the core explanatory variables is a common robustness test method [55][56][57]. This paper draws on the practice of Zhao [58] and selects five indicators: Internet penetration rate, number of Internet-related employees, Internetrelated output, number of mobile Internet users and digital inclusive financial development index.…”

Higher Interest Rate & Credit Risk Management: Insights for Pakistan's Banking Sector from Us Silicon Valley Bank

“…SenGupta (2020) declared that Pakistan's banking industry is lagging due to political incredibility and intervention, facing credit risk, operational issues, FEX risk, interest rate disturbances, capital inadequacy and volatile economic environment (Altaf, Ayub, Shabbir, & Usman, 2022). Financial meltdown, political instability, price hiking, corruption, economic unrest, poor management, illiteracy, low per capita income, less savings are contributing to low adaptation of risk management practices (Bagh, Naseer, & Khan, 2022) Increasing trend of interest rate is not projected and not accounted in long term financing, interest rate is going up quickly whereas on the other hand "import curfew" deteriorated the exports. Bank may fall short of MCR and high-cost deposits, growing infection ratio in borrowing portfolios.…”

“…SenGupta (2020) declared that Pakistan's banking industry is lagging due to political incredibility and intervention, facing credit risk, operational issues, FEX risk, interest rate disturbances, capital inadequacy and volatile economic environment(Altaf, Ayub, Shabbir, & Usman, 2022). Financial meltdown, political instability, price hiking, corruption, economic unrest, poor management, illiteracy, low per capita income, less savings are contributing to low adaptation of risk management practices(Bagh, Naseer, & Khan, 2022). Pakistan's banking industry is facing negative and downgraded credit rating from B3 to Caa1 by different rating agencies in the last one year due to accelerating interest rate and default rumors of the financial transactions; not only alarming but also an indication that Pakistan's banking industry is following the footsteps of Silicon Valley Bank.…”