The Consequences of Easy Credit Policy, High Gearing, and Firms’ Profitability in Pakistan’s Textile Sector: A Panel Data Analysis

Ijaz Hussain ()
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Ijaz Hussain: School of Social Sciences, Beaconhouse National University (BNU), Lahore, Pakistan.

Lahore Journal of Economics, 2012, vol. 17, issue 1, 33-44

Abstract: This study uses panel data on 75 textile firms for the period 2000–09 to examine the consequences of an easy credit policy followed by high gearing, increased financing costs, and other determinants of corporate profitability. Five out of nine explanatory variables—including gearing, financing costs, inflation, tax provisions, and the industry’s capacity utilization ratio—have a negative impact, while the remaining four variables—working capital management, asset turnover, exports, competitiveness, and devaluation—have a positive impact on firms’ profitability.

Keywords: Easy credit; energy crisis; corporate profitability; textile sector; panel data; Pakistan. (search for similar items in EconPapers)
JEL-codes: F14 L69 L78 (search for similar items in EconPapers)
Date: 2012
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