Financialization and Manufacturing Firm Profitability under Uncertainty and Macroeconomic Volatility: Evidence from an Emerging Market
Firat Demir
Review of Development Economics, 2009, vol. 13, issue 4, 592-609
Abstract:
Using semi‐annual data from 1993 to 2003 for all publicly traded manufacturing firms in Turkey, this paper explores the impacts of macroeconomic uncertainty and external shocks on profitability of real sector firms in the presence of multiple investment options in both real and financial sectors. The paper argues that increasing availability and accessibility of investment opportunities in the financial markets help real sector firms sustain profit margins despite market rigidities, increasing goods market competition, or higher levels of risks. The empirical results based on dynamic panel estimations show that increasing macroeconomic uncertainty and volatility have a significantly negative effect on firm profitability. In contrast, increasing the share of financial investments in total assets is found to be reducing such negative effects at a statistically and economically significant level.
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (20)
Downloads: (external link)
https://doi.org/10.1111/j.1467-9361.2009.00522.x
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bla:rdevec:v:13:y:2009:i:4:p:592-609
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1363-6669
Access Statistics for this article
Review of Development Economics is currently edited by E. Kwan Choi
More articles in Review of Development Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery (contentdelivery@wiley.com).