Monetary Policy and the Survival Analysis of the Firms in Pakistan

Safia Shabbir

MPRA Paper from University Library of Munich, Germany

Abstract: Using the information on 629 companies listed at Karachi stock exchange over a period of 40 years (1975-2014), this study finds out the effect of monetary policy and industrial dynamics over the hazard rate of both the financial and non-financial companies. The study concludes that monetary contraction increases the probability of exit of the companies by 44 percentage points, while LSM growth and age reduces the hazard rate. Further companies in textiles are most likely to exit, while firms working in food & beverages, cement & construction and chemical & engineering are less likely to exit. On the other hand, credit growth increases the risk of exit for the financial companies and rise in weighted average lending rate reduces the probability of exit. Moreover, well-established companies are less likely to leave the market.

Keywords: Monetary Policy; Firm behaviour; Hazard Rate; Survival Analysis (search for similar items in EconPapers)
JEL-codes: D4 E32 E43 E58 (search for similar items in EconPapers)
Date: 2017-01-15
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