Impact of Credit Constraints on Firms Growth: A Case Study of Manufacturing Sector of Pakistan
Journal Title: Journal of Quantitative Methods (JQM) - Year 2017, Vol 1, Issue 1
Abstract
This study explores the impact of credit constraint on growth by using firm level data of manufacturing sector of Pakistan for the period of 1974-2010 analyzing via Generalized Method of Moments (1991) one step and two step estimation technique. Result of full sample shows that the firms in manufacturing sector for the period from 1974-2010 are not facing external financial constraints and the effect of sale to capital ratio indicates the availability of investment opportunities for the firms in the manufacturing sector of Pakistan. The results for pre and post financial sector reform era shows that firms are facing tight external financial constraints in pre financial reform era as compared to post financial reform era. Results show that growth of firms having small assets is constrained by internal finance whereas firms having medium and large assets are not constrained by internal finance. Similarly, firms’ growth that is less dependent on debt finance is constrained by internal finance whereas results for the firms that are moderately and highly aggressive in financing with debt indicate that the growth of firms belonging to these groups is not constrained by internal finance. Similarly, low dividend paying firms growth is constrained by internal finance whereas high dividend paying firms’ growth is not constrained by internal finance.
Authors and Affiliations
Mughees Tahir Bhalli, Shahid Mansoor Hashmi, Arslan Majeed
Corruption, Political Instability and Sustainable Development: The Interlinkages
The study empirically probed the interdependence among corruption, political instability and sustainable development for a panel of 28 developing economies and disaggregated sample of lower-middle and upper-middle income...
Environmental Kuznets Curve: A Times Series Evidence from Pakistan
In this paper, the Environmental Kuznets Curve (EKC) is used to investigate the connections between CO2 emissions, energy consumption, economic growth, trade openness and urban population in Pakistan over the period of 1...
Cost Leadership, Market Orientation and Business Performance: An Empirical Investigation
The study aimed at examining the relationship between cost leadership strategy, market orientation and business performance of manufacturing, Small and Medium Enterprise performance (SMEs). A quantitative survey method w...
Energy Consumption and Economic Growth: Evidence from Developed and Emerging Markets
This research analyzed the effect of energy consumption on economic growth using neo-classical one-sector aggregate production function with panel data from Emerging Markets and Developed countries over the period 2000–2...
Infrastructure Development in Punjab, Pakistan: From Assessment to Spatiotemporal Analysis at District Level
Access to inclusive and sustainable infrastructure to the masses of each spatial unit of any country and region is of the paramount importance. This paper aims at examining the level of infrastructure development, analys...