The Determinants of Mutual Funds Success in Pakistan

The prime goal of this research is to find out the determinants of mutual fund’s success in Pakistan. This study exploits the convenient sampling techniques and the data gathered from fund manager reports, annual reports, and from CDCPL. The sample size of this study relaxed to six Assets Management Companies (AMC)’s from 2013 to 2017. We applied a unit root test for finding the nature of data and check the variation of variable’s mutual performance by Hausman Technique. Moreover, we depicted the association between dependent and independent variables with the help of Constant Coefficient Model. It was concluded that risk-adjusted return, management structure, and expense ratio have a significant impact on the size of fund of selected AMC’S of Pakistan. However, the net asset value found to be negatively related with the size of the fund. This research will help investors, AMC’s and regulatory bodies to understand the dynamics of mutual funds in Pakistan.DOI: 10.15408/ess.v8i2.743

Analysis of GDP and Macroeconomic Variables on Economic Growth of Pakistan

GDP represents the economic growth of a country. Higher GDP growth is translated as higher economic growth. In case of Pakistan, the GDP is continuously going down due to some macroeconomic factors. This is an alarming situation for the Pakistani government. The main ambition of this study is to interrogate the four selected independent variables which impact on the GDP of a country and verify if the relation holds in Pakistan. This study expects to ascertain the effects on GDP performance in short or long run of inflation, unemployment, foreign direct investment and import prices of goods and services. It utilizes the data of the last 30 years for the Pakistani Economy i.e. the period of 1983 to 2012. Several statistical techniques have been applied. Five SEM models were used to estimate causal relationships. The outcome of this research suggests that the government needs to pay attention (1) to the control of inflation through effective and efficient monetary policy, (2) to increase employment chances by the supporting and establishing new industries and (3) advancing infrastructure. Government of Pakistan should also support Pakistani export in order to decrease heavy import prices and always encourage foreign direct investments. These outcomes will be helpful in managing the economic growth rate of Pakistan.Keywords: Gross Domestic Product, Unemployment, Foreign Direct Investment, Import/ Export, Inflation

Determinants of capital structuring: an empirical study of growth and financing behavior of firms of textile sector in Pakistan

Purpose- Purpose of this study is to investigate the determinants of optimal capital structuring that affect growth and financing behavior of textile sector firms in Pakistan keeping in view the important role capital structuring plays in any firm's financial management decisions and the positive contribution it makes to the creation of firms' value and profitability. Methodology/sample- Size of the firm (capital), profitability, fixed assets structure and taxes were used as control variables to investigate the determinants of optimal capital structuring of textiles companies. A sample size of 90 textile companies across the country was selected and their data for the 2005 – 2010 periods was used. The determinants of optimal capital structure were examined using correlation and regression analyses. F-value was calculated to test the fitness of overall model. Findings- Results of the study showed a negative relationship between dependent variable financial leverage and independent variables. The statistical analysis of spinning and composite unit also showed consistency of results with the overall textile sector but outcome of weaving unit showed a significantly positive relationship between dependent and independent variables. Practical Implications- The findings enhance the knowledge base of determinants optimal capital structure and are likely to help companies take effective decision related to capital structure needs. Furthermore, the study is likely to help the decision makers better adjust themselves towards adopting and considering proficient ways of managing capital structure of a firm

Relationship between Efficiency Level of Working Capital Management and Profitability of Firms in the Textile Sector of Pakistan

The main aim of this study is to investigate the relationship between working capital management (WCM) and firm’s profitability in the textile sector of Pakistan. WCM plays an important role in firm’s financial management decisions. An optimal WCM is expected to contribute positively to the creation of firm’s value and enhancement of its profitability. Working capital, fixed assets’ cost, Cost of production, cost of debt (interest expense), and size (capital) of the firm as control variables are also used to investigate their effect on profitability (net income). A sample size of 55 textile companies in Pakistan has been selected for a period of six years, from 2003 to 2008. The relationship between WCM efficiency and profitability is examined using correlation, regression analyses and ANOVA (Analysis of Variance) test. The results show a strong positive significant relationship between WCM and firm’s profitability in Pakistan’s textile sector. In case of control variables, it is found that there is a significant relationship between working capital, fixed assets’ cost, cost of production, and size (capital) and profitability. However, results show a significant negative relationship between debt used by the firm and its profitability. The findings enhance the knowledge base of WCM and will help companies to manage working capital efficiently. Moreover, it will help the policy makers and decision making authorities to better orient themselves towards considering and adopting efficient ways of managing working capital

Relationship between Efficiency Level of Working Capital Management and Profitability of Firms in the Textile Sector of Pakistan

The main aim of this study is to investigate the relationship between working capital management (WCM) and firm’s profitability in the textile sector of Pakistan. WCM plays an important role in firm’s financial management decisions. An optimal WCM is expected to contribute positively to the creation of firm’s value and enhancement of its profitability. Working capital, fixed assets’ cost, Cost of production, cost of debt (interest expense), and size (capital) of the firm as control variables are also used to investigate their effect on profitability (net income). A sample size of 55 textile companies in Pakistan has been selected for a period of six years, from 2003 to 2008. The relationship between WCM efficiency and profitability is examined using correlation, regression analyses and ANOVA (Analysis of Variance) test. The results show a strong positive significant relationship between WCM and firm’s profitability in Pakistan’s textile sector. In case of control variables, it is found that there is a significant relationship between working capital, fixed assets’ cost, cost of production, and size (capital) and profitability. However, results show a significant negative relationship between debt used by the firm and its profitability. The findings enhance the knowledge base of WCM and will help companies to manage working capital efficiently. Moreover, it will help the policy makers and decision making authorities to better orient themselves towards considering and adopting efficient ways of managing working capital

Is Bankruptcy Risk a Systematic Risk? Evidence from Pakistan Stock Exchange

This study empirically investigates the relationship between default risk and cross-section of stock returns in the Pakistan Stock Exchange (PSX). Stock price data from all listed and delisted companies use to calculate monthly returns from 2001-2016. Ohlson's O-score is employed to measure exposure of firm to systematic deviation within bankruptcy risk. Besides, asset-pricing models like the Capital Asset Pricing Model (CAPM) and Fama French (FF) models are employed. Portfolios are sorted in deciles by default probability. This result finds that stocks of firms significantly exposed to not diversified Default Risk yield higher returns. Besides that, the FF models explain cross-sectional stock returns since factors incorporate information on financial distress and default. After that, the book-to-market equity factor is not significant in elucidating returns of distressed firms because of market inefficiency. Results have practical implications for portfolio managers and investors of an emerging economy in developing diversified portfolios during periods of uncertainty and market volatility.JEL Classifications: G12, G15, G33How to Cite:Chhapra, I. U., Zehra, I., Kashif, M., & Rehan, R. (2020). Is Bankruptcy Risk a Systematic Risk? Evidence from Pakistan Stock Exchange. Etikonomi: Jurnal Ekonomi, 19(1), 51 – 62. https://doi.org/10.15408/etk.v19i1.11248

Consumer’s Preference and Awareness: Comparative Analysis between Conventional and Islamic Ijarah Auto Financing in Pakistan

A healthy banking industry plays a vital role in the economic stability, and banks success depends on its products. Therefore, this study aims at cognizing the consumer’s preference and awareness of Islamic Ijarah over the conventional lease in Pakistan. This research used regression as tools of analysis. The findings indicate that convenience is the prime determinant for preference of Ijarah over the lease. Moreover, all other factors except religion also support in the motivate selection of Islamic banking products. Therefore, it can be concluded that in Pakistan, religion is not the only fact motivates individuals to prefer Ijarah. Based on findings, it is recommended to relevant stakeholders to create more awareness among masses about Ijarah and to further ease out policies in order to harness optimum benefit.DOI: 10.15408/aiq.v10i2.710

Analysis of customer satisfaction in services industry: A case study of private universities in Karachi, Pakistan

The purpose of this study is to analyze which factors have influence on the satisfaction of customers in service sector which can ultimately affects organization’s profitability. This study attempts to examine the relationship between students’ satisfaction and others variables such as service quality, empathy and customer relationship management. The investigation is conducted both from a theoretical and empirical point of view after conducting a pilot study, the instrument was administered to 100 under graduate and postgraduates who were selected based on random sampling from the four private universities of Karachi, Pakistan. The analysis started with descriptive analysis followed by regression, correlation and reliability analyses. The empirical results of the relationships in this study provide support for the Hishamuddin study (2008), which identified the factors contributing to the satisfaction of students. The results verify that service quality and empathy has significant impact on the students’ satisfaction level, while female were found to be more satisfied. The outcomes of the study also showed positive relationship among all the three explanatory variables and dependent variable

Impact of foreign direct investment on economic growth: A case study of Pakistan

Purpose- This research paper aims to analyze the impact of foreign direct investment (FDI) in Pakistan for the period 1981 to 2010. It evaluated the GDP growth performance and assessed the historical trends of the FDI and CPI in Pakistan. Methodology/Sample- The link between gross domestic product (GDP,) foreign direct investment and Inflation is measured with the help of multiple regression models. GDP in this model is used as dependent variable whereas FDI and inflation (CPI) are measured as independent variables. Findings- According to the results, the model is overall significant with the positive and significant association of GDP and FDI while a negative and significant relationship found between GDP and inflation. Practical Implications- On the basis of the empirical results acquired, Policy proposals are advised to attract FDI in Pakistan. Foreign direct investment (FDI) is an essential factor for economic growth in the developing countries. FDI allows the transfer of technology, uplift competition in the domestic input market, contributes to human capital development and Profits created by FDI contribute to corporate tax revenues in the host country

Are Stock Prices a Random Walk? An Empirical Evidence of Asian Stock Markets

Investigating if the market is efficient is an old issue as market efficiency is imperative for channeling investments to best-valued projects and its importance endures. There is contradictory evidence in the literature provided by empirical researches. The primary purpose of this research has been to find out whether share prices are a random walk process by applying multiple unit root tests, Runs Test and newly developed State Space Model. The empirical findings of the study provide sufficient evidence that the stock prices of KSE 100 Index, S &amp; P BSE 500 Index, and CSE All Share Index is not a random walk process and are thus weak form inefficient hypothesis. In this study, the concept of the random walk is examined considering only the stock markets while bypassing the other asset markets. This research supply exciting facts about independent samples from Pakistan, India, and Bangladesh and complement the existing literature on emerging markets.DOI: 10.15408/etk.v17i2.7102</p