Journal of Finance and Accounting Research

Nexus among Entrepreneurial Activities, Human Capital, and Economic Growth to achieve Sustainable Development Goals (SDGs): Moderating Role of Financial Development

Abaidullah Abaidullah, Muhammad Farhan Basheer — Mon, 03 Jun 2024 00:00:00 +0000

Every economy invests heavily to achieve Sustainable Development Goals (SDGs). SDGs attempt to provide everyone with an access to a high-quality education. The more access to schooling individuals have, the more likely they are to think creatively and take entrepreneurial initiatives. It is vital to invest in personnel to generate economic activities that are suitable for the intricacies of a sustainable economy. The current study attempted to examine the effects of human capital and economic growth on entrepreneurial activities, considering the moderating impact of financial development. The study employed a fixed effects estimation technique to unbalance panel data in various economies using the time period from 2011-2019. The results indicated that human capital, through secondary and tertiary education, significantly and positively stimulates the entrepreneurial activities to achieve SDGs worldwide. In contrast, human capital acquired through primary education doesn't affect entrepreneurial activities positively. Financial development has a positive and statistically significant effect as an explanatory variable, however, the moderating effects of financial development remain poorly grasped. The current study provided policymakers, researchers, and academia with valuable information to foster an environment conducive to entrepreneurial activities in order to achieve the SDGs.

Impact of Internal and Macroeconomic Risks on Financial Performance, Growth, and Stability of Domestic and Foreign Banks in Pakistan

Muhammad Akmal, Jamshid ur Rehman, Abdul Rashid — Thu, 27 Jun 2024 07:02:45 +0000

The current study aims to scrutinize and compare the effects of internal and macroeconomic risks taken by foreign and domestic banks in Pakistan on their financial performance, growth, and stability. It also compares the substantial impact of both types of risks between foreign and domestic (both Islamic and conventional) banks. Internal risks include liquidity risk, operational risk, credit risk, and capital risk, whereas macroeconomic risks include exchange rate risk, interest rate risk, and inflation rate risk. Using a two-step system GMM with the collapse command, a sample of commercial banks including both Islamic and conventional banks was analyzed over the period 2008-2020. Based on the results, it was determined that both types of banks experience negative exposure to both macroeconomic and internal risks, affecting their financial performance, growth, and stability. However, the impact of both categories of risks was found to be more substantial in the case of domestic banks. Moreover, the results also hold true for both Islamic and conventional banks. The findings recommend that both domestic and foreign Islamic banks are more competent in the practices of risk management, as compared to domestic and foreign conventional banks. The current study has implications for investors, bank management, policymakers, and regulators. In particular, domestic conventional banks should prioritize to enhance their cost management, granting and monitoring of credit, and risk diversification, as well as upgrading their human and technological capital.

Revealing the Financial Strategies of Multinational Giants and Local Enterprises in Pakistan: A Deep Dive into What Drives Their Leverage Choices

Farah Yasser — Wed, 26 Jun 2024 00:00:00 +0000

The current research comparatively explored the factors affecting the capital structure of domestic corporations (DCs) and multinational corporations (MNCs) in Pakistan for the period 2016-2021. It found that MNCs hold a higher ratio of debt to equity in their mix of capital structures than DCs. Using the fixed effects model, this study established that older firms manage to capitalize their debts. At the same time, the large size of firms and higher bankruptcy costs cause a high debt ratio in the capital structure of both types of corporations. The results also revealed that free cash flows are inversely and significantly associated with the capital structure of DCs. On the contrary, non-debt tax shield, collateral value of assets, and foreign exchange risk are directly and significantly associated with DCs only. This study also found that profitability and agency cost are not significant determinants of capital structure in either type of firms. Significant policy implications stem from the results, particularly in the areas of taxation, international trade, and financial regulation. Moreover, the findings provide insight into the complex interaction of factors influencing the capital structures of DCs and MNCs, which would be helpful for policymakers.

Impact of Free Cash Flow (FCF) on Firm Performance: Evidence from Pakistan

Usman Hameed, Shakeel Iqbal, Dr, Bab Shah — Fri, 19 Jul 2024 00:00:00 +0000

According to free cash flow (FCF) theory, there is a negative correlation between a manager's restriction of FCF and company performance. It suggests that dividend payouts and debt financing tend to decrease the FCF, resulting in enhanced company performance. To examine this hypothesis, a study was conducted in Pakistan that focused on non-financial companies listed on the Pakistan Stock Exchange PSX. The research employed stratified sampling technique by selecting 28 companies. Data was collected from the time period 2013-2017. The data obtained from the State Bank of Pakistan (SBP) and financial statements from company websites served as primary sources. The study considered variables, that is, FCF, dividend per share, leverage (LEV) (as independent variables), return on assets (ROA) (as the dependent variable), and capital liquidity along with firm size (as control variables). Panel regression analysis utilizing EViews was used for data analysis. Findings showed that both FCF and dividend payouts have a significant and positive impact on firm performance, while LEV does not exert a significant effect. Moreover, firm size was identified as having a significant negative impact on firm performance. The outcomes of the current study hold potential value for both foreign and local investors as well as for companies aiming to establish robust dividend policies.