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
Keywords
Related Articles
- EP ID EP546687
- DOI 10.29145/2017/jqm/010102
- Views 176
- Downloads 0
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...
Quantitative Methods and its Contemporary Directions
As complex social, political, economic and business factors affect quantitative research, a critical debate is needed to understand and apply them in evidence based scenarios.
Detecting Stationarity of GDP: A Test of Unit Root Tests
Despite extensive research of research on unit roots, consensus on several important issues and implications has not emerged to date (Libanio, 2005). There are many series which were being investigated for existence of u...
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...