Department of Finance

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https://escholar.umt.edu.pk/handle/123456789/1164

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Effects of fiscal policy on GDP for the case of Pakistan.
(University of Management and Technology Lahore, 2014) Manal Sharif Bajwa
The Purpose of this paper is to determine the impact of the fiscal policy on GDP in Pakistanusing time series data for the period 1980-2014. Asymmetry in the fiscal policy will be explained by Direct taxes ,indirect taxes, development expenditures and current expenditures. ARDL model is used for the analysis. The outcome supports two key conclusions. Current expenditures and indirect tax do not have asymmetry in their model while development expenditure and direct tax have asymmetry in their model. So the policy makers can see the increasing and decreasing Direct taxes and development expenditures they can make sure that the effect might not be same and opposite. This study will provide help in determining the importance of fiscal policy for the development of Pakistan.
Islamic house finanacing in Pakistan
(University of Management and Technology, 2014) Mansoor Javed, Muhammad
This study analyzes the demand for house financing offered by Islamic banks by exploring the nature of demand as well as highlighting its major determinant. The paper also strives to find out the level of knowledge of people regarding Islamic financing, factors encourage them to buy their own house, their perception of Islamic house financing and finally those features which influence customers’ decisions relating to the selection of finance provider. The population of the study is residents of Lahore who intend to buy their own house within next three years. A survey has been conducted using convenient sampling technique taking a sample size of 300 respondents. The response rate of survey is 81%. The study found that nature of demand for house financing offered by Islamic banks is conventional. Later, logistic regression has been applied to find out the affect of knowledge, quality of service and sincerity with religion on such demand. The results indicate that religious factor and knowledge affect the demand for Islamic house financing negatively whereas quality of service affect such demand positively. However, only the affect of quality of service on demand is statistically significant. On the other hand, study found that people have general knowledge of Islamic financing but they do not have specific knowledge of Islamic house financing. Further, male respondents have higher knowledge than the knowledge of female respondents. Moreover, people with higher qualification have higher knowledge. Income rise is the most important factor which encourages people to buy their own house. It is also found that people perceive Islamic house financing similar to conventional house financing. Finally, the survey also highlight that the cost of service is the most important criterion used by the potential clients to select their finance provider.
Factors determining the selection of captial budgeting techniques
(University of Management and Technology, 2014) Farrukh Ijaz
Purpose: The main purpose of this research study is to determine the factors that play an important role in the selection of a particular capital budgeting techniques. The study determines the factors that an investor considers significant in the selection of capital budgeting techniques. Methodology/Design/Approach: A primary data based study of 92 firms has been conducted to find the determinants of capital budgeting techniques selection while considering financial and non financial factors. The financial factors include company size, growth rate and capital expenditure, whereas non financial factors include project life, industry, management demographics, competition in the industry, environmental uncertainty and risk. Findings: The study concludes that firm’s decision maker’s considers both financial and non financial factors (except leverage level and company age) while selecting capital budgeting technique. Small firms usually rely on a one capital budgeting technique and therefore, mostly don’t consider the non-financial factors like company age, competition and demographics. Research Limitations: The study takes the data of the listed and non-listed companies that are operating and having their offices in the region of Lahore. Managerial Implications: The study assist investor’s and decision making authorities of domestic and international firms to have a better look of taking capital budgeting decisions. This research also enables a broad and rich overview of capital budgeting techniques used for investment projects within the Pakistan. Originality/Value: Most of the operational issues and factors of capital budgeting methods leading to its long term sustainability and selection are brought under discussion. First comprehensive study has been conducted on factors determines the selection of capital budgeting techniques within the Pakistan.
Investigating the leverage composition of MNCs and DCs of Pakistan through their determinants
(University of Management and Technology, 2014) Farah Yasser
Purpose – This study seeks to investigate the leverage composition of MNCs and DCs in Pakistan through their determinants Design/methodology/approach – Fixed effect regression is used to show the relationship of determinants of capital structure on leverage for MNCs and DCs listed on Karachi Stock Exchange (KSE) for the period of 2006 to 2011. Findings – The results suggest that agency cost, non debt tax shield and business risk are not significant determinants of capital structure for all types of samples i.e. all firms, DCs and MNCs. Bankruptcy cost is a significant determinant of capital structure for MNCs and otherwise in cases of all firms and DCs. On the other hand, size, growth, free cash flows and collateral value of assets are significant determinants for all firms and DCs and not for MNCs. Furthermore, age and foreign exchange risk are significant determinants for all firms, DCs and MNCs. Originality/Value – This is the first study to investigate the leverage composition of MNCs and DCs of Pakistan and results suggest MNCs hold more debt in their capital structure than DCs. Key words: Leverage, Determinants of Capital Structure, Domestic Corporations (DCs) and Multinational Corporations (MNCs).
Investigation of performance and volatility of Pakistani conventional mutual funds: Comparison with Islamic mutual funds
(UNIVERSITY OF MANAGEMENT AND TECHNOLOGY, 2015) Muhammad Adnan Izhar
Purpose: The main purpose of this research is to investigate the differences in terms of performance and volatility between conventional and Islamic mutual fund in the context of Pakistani capital market. The study determines the mutual funds that an investor considers significant while making his investment.
Foreign direct investment and its causal relationship with economic growth, human resource development, economic competitiveness and corruption: SAARC countries
(UNIVERSITY OF MANAGEMENT AND TECHNOLOGY, 2015) Mohyuddin Tahir Mahmood
This research indicated the foreign direct investment inward in SAARC region and then studied the causal relationship of FDI inward with the three different indexes (i.e human development index, competitive index and corruption index) and also investigated the impact of FDI inward on economic growth. The main focus of this thesis is SAARC member states. Panel data was used as sample data that consists of observations from a number of countries in time series manner. Five countries (Pakistan, Nepal, Sri-Lanka, India and Bangladesh) from South Asian Association for Regional Cooperation covering period of 1995-2012 were selected. Fixed effect and random effect models were used for data analyses to draw conclusions. Economic competitiveness had strong negative relationship with foreign direct investment. Corruption showed negative strong relationship with foreign direct investment. Human resource development has a positive relationship with foreign direct investment inward. Foreign direct investment inward has a negative effect on the economic growth but the coefficient value 7.75E-11 shows this effect is so minor that it can be considered as no effect.
Impact of political news on stock market: Evidence from Pakistan
(UNIVERSITY OF MANAGEMENT AND TECHNOLOGY, 2015) Kaneez Aisha
The objective of this research study is to examine the impact of political events on the stock marketperformance in Pakistan. In this study event Study Methodology is applied to investigate the impact of each event onKSE-100 index.Statistical technique independent t-test and F-test two samplesfor variance are applied to examine the impact of political events on stock market. The study focuseson different57 major political events from the period of 2005 to 2014. This study is attempted to determine the relationship between these political events and KSE-100 index by using 13 days event window. This study concludes that out of 57 events only 4 events have significant impact on KSE-100 index, the significant events are those which cause political stability and instability. So,on the basis of analysis it can be said that stock market is not reacting to political event in Pakistanin most cases.
Impact of bank’s structural determinants on banks’ performance: A case study of Pakistan
(UNIVERSITY OF MANAGEMENT AND TECHNOLOGY, 2015) Maqsood, Nazik
Purpose/objective: The purpose of conducting this study is to examine the impact of structural determinants on the smaller and larger banks’ performance and to make the comparative analysis of banks’ performance. Design/approach/ methodology:To examine the impact of structural determinants on banks’ performance, bank size (lnTA), liquidity (DEPTA), asset composition (LTA), capital adequacy (CAR), cost management (OCTA), credit risk (LLPTL), productivity (NIETA), efficiency (IELF) are taken as explanatory variables and performance measure (ROAA) is used as dependent variable. To investigate the impact ofstructural determinants on performance of banks, sample for 7 large banksand 7 small banks is taken from the conventional banks of Pakistan for fourteen years during the period 2001 to 2014. Panel data is used to conduct the analysis. Ordinary least square method, fixed and random effect regression techniques are applied on data.
Predicting stock price movement in Pakistan: Comparison between artificial neural network models and traditional linear models: A case of KSE
(UNIVERSITY OF MANAGEMENT AND TECHNOLOGY, 2015) Muhammad Abubakr Naeem
Since the establishment of the Karachi Stock Exchange (KSE) in 1993, Pakistan's stock markets have expanded rapidly. Although this rapid growth has attracted considerable academic interest, few studies have examined the ability of conventional financial models to predict the share price movements of stocks. This gap in the literature is significant, given the volatility of the Pakistani stock market and the additional risk arising from the political and regulatory environs of Pakistan, we examine the relative ability of Hybrid Artificial Neural Networks models to forecast stock returns. In this research, the gap is attended by comparing the predictive ability of three linear models i.e. Univariate ARIMA model, Multivariate CAPM model and Multivariate three factor model. Furthermore, we compared these three linear models with the equally specified artificial neural network models containing the same predictor variables. One of the advantages of artificial neural networks is that they relax the model linearity assumption. The analysis conducted is based on the data from Karachi Stock Exchange, containing data for companies from the period of 2010-2014. The results of the research designate that the multivariate models i.e. the dynamic CAPM and the dynamic three factor model surpass the univariate model, that only incorporate lagged returns of stock prices, in forecasting future returns. Additionally, using the artificial neural networks notably enhance the predictive ability using the same predictor variables. Also, irrespective of the linear or non-linear model used, there is significant difference in the forecasting accuracy of univariate ARIMA, multivariate CAPM and multivariate FF3 model.
Financial performance of public & private sector banks of Pakistan: “A comparative analysis
(UNIVERSITY OF MANAGEMENT AND TECHNOLOGY, 2015) Abdullah Imtiaz
This study empirically tries to find out the effect of bank specific factors on banks performance of Pakistani banks and how their performance is different from each other? To achieve this purpose the panel data of 19 (15 private & 4 National Commercial ) banks have been selected as a sample form the year ended 2009 – 2014 on quarterly bases by applying one of the most important technique GMM estimation approach proposed by Arellano and Bond (1991) using E views. The bank specific variables included net NIM, DTAR, CTIR, CAR, SIZE and ATDR. ROA and ROE were used as profitability measures.
Impact of paternalistic leadership on higher education institutes effectiveness: mediating role of organizational citizenship behavior
(University of Management and Technology, 2015) Maham Shahid
The study has aimed at examining the impact of organizational citizenship behavior of university teachers as a possible mediator between paternalistic leadership style of supervisors and overall effectiveness of the educational institute. Since, Pakistanis a developing county, and to advance towards a developed country, education needs to be in major and vital focus. Top 10 universities, chosen from the Higher Education Commission of Pakistan's current list, were investigated.Positivist approach is used for the study as it aimed at fact based analysis. Questionnaire (carrying 46 questions: 12 for PL, 4 for OCB and 30 for OE) was administered by adopting measures already used in different studies for respective variables. Pal Scale was distributed to the faculty members of the universities (N=322), reporting about their supervisor's leadership style. Moreover, employees were told to address about their extra-role behavior, i.e. organizational citizenship behavior, by using the scale developed by Welbourne, Johnson and Erez. In addition to this, employees evaluated the overall effectiveness by using the organizational effectiveness scale for Higher Education Institutes of Kwan and Walker.
Impact of macroeconomic variables on stock market indices: Evidence from SAARC countries
(UNIVERSITY OF MANAGEMENT AND TECHNOLOGY, 2015) Saman Rubab
Purpose − Present study seeks to investigate the impact of macroeconomic variables on stock market indices in case of SAARC countries. Design /Approach/Methodology − Data for dependent variable (stock market index) and independent variables (money supply, inflation, interest rate, gross domestic product, exchange rate and foreign direct investment) is collected covering time period from 1995 to 2014. Ordinary least square regression, fixed effect and random effect techniques are used to examine the impact of macroeconomic variables on stock market indices in case of SAARC countries.
Impact of internal mechanism of corporate governance on firm performance: industry-wise empirical analysis
(University of Management and Technology, 2015) Sabahat Riaz
ABSTRACT The present study investigates the impact of some of the variables of corporate governance on firm performance. Main purpose of the study is to investigate whether corporate governance vary from sector to sector because overall results seem to be misleading on the premise that industrial norms vary from sector to sector and even firm to firm within same sector. For this purpose, a sample of 50% firms has been chosen randomly from top non-financial seven sectors of Pakistanfor the years from 2008 to 2014. These sectors have significant role in KSE-100 index fluctuation. Dependent variable is firm performance measured as ROA, ROE and Tobin Q whereas independent variables of corporate governance include Board Size, Board Composition, CEO Compensation and Ownership Concentration. Overall descriptive statistics show that highest board size is 16 with minimum of 7. Board size ranges from 8 to 16 in different sectors. There are certain firms in different sectors where leverage is zero and CEOs do not draw compensation.
Modeling EVA against traditional accounting measures to explain the stock price returns
(UNIVERSITY OF MANAGEMENT AND TECHNOLOGY, 2015) Maham Ijaz
The research study aims to examine the explanatory power of on value based measure of performance; Economic Value Added (EVA) compared with three conventional measures of performance; Earnings on each share (EPS), Investment returns (ROI) and Equity returns (ROE). The comparison is done in order to explain share market returns in Karachi Stock Exchange (KSE), Pakistan. This is one of the prior studies in the boundary of Pakistanregarding value relevance comparison of conventional and value based measures of performance. The methodology follows the valuation model for the respective purpose, proposed by Easton & Harris. Both relative and incremental content approaches have been employed to describe the explanation of share returns by the best measure of performance, either value based or traditional one. The explanatory power of pairwise combinations of value based and conventional measures is also examined to describe returns on stocks. For the respective purpose, the study targeted the sample of 30 companies listed in Karachi Stock Exchange (KSE) and collected pooled cross sectional and panel data over the period 2005-2014. Results of relative content information indicate EPS to be more closely related to stock returns other than EVA and remaining measures of performance, while except EPS, EVA is better measure than remaining two. However, incremental content information suggests EVA and EPS pairwise combination to increase the explanatory power for share market returns explanation. The outcomes of the study recommend that Pakistanstock market participants should pay attention to new value based measures of performance. Also, the participants should develop strategies for investment by examining more determinants. Moreover, the results require the extension of understanding the EVA role in stock market but they may affect the decisions of investor‟s having the market characteristics similar to that of Pakistan.
An empirical analysis of banking sector in Pakistan: Islamic versus conventional banks
(UNIVERSITY OF MANAGEMENT AND TECHNOLOGY, 2015) Bushra Shafiq
The purpose of this research study is to determine the impact of service quality being provided by the Islamic and Conventional banks on customer's judgments towards their satisfaction level on different parameters of Islamic banks in the region of Lahore, Pakistan.
Financial leverage and investment pattern in capital expenditure A case of non-financial companies of SAARC countries
(UNIVERSITY OF MANAGEMENT AND TECHNOLOGY, 2015) Muhammad Mukarrum
This thesis was aimed to test the investment pattern for non-financial companies of SAARC Countries. For this purpose five SAARC countries were taken including; Pakistan, India, Bangladesh, Sri Lanka and Maldives. Other SAARC countries were not included because of unavailability of the data. In this study two type of leverage were used; one is Total Debts divided by Total Assets and second is Long Term Debts divided by Total Assets. This Study applies Linear Regression and Generalized Least Square Method (GLS). In Linear Regression there was a problem of heteroscedasticity in the data. So GLS was applied to see the unbiased results. This study gives three important findings; first individual countries companies' data was analyzed. Secondly the comparative analysis was applied among five SAARC countries' companies. Thirdly investment pattern was analyzed with low growth and high growth firms for selected five countries. It was found that leverage one (Total Debts/ Total Assets) is negatively influencing to investment in case of Pakistan& India but in case of Sri Lanka, Bangladesh and Maldives leverage one is positively influencing. The second type of leverage (Long Term Debts/Total Assets) is influencing negatively to investment in all selected countries except for Bangladesh in which leverage two is positively influencing. For low growth and high growth firms the influence of leverage is different for different countries.
Investor views about intrinsic value and stock price
(UNIVERSITY OF MANAGEMENT AND TECHNOLOGY, 2016) Reema Sattar
The objective of the study is to examine the difference between price of a stock and its intrinsic value by applyingDDM (dividend discount model).Study will also identify whether the stocks are overvalued or undervalued, when comparing with its intrinsic value. This study has a rare focus in the context of Pakistanbecause at this pointing time investors are more curious while picking a stock when investing in the stock market. This study has a great implication for those who wanted to be invested in the stocks
Role of cash flow sensitivity and managerial discretion in the investment decisions: evidence from an emerging market
(University of Management and Technology Lahore, 2016) Ahmed, Rehan
This research aims to investigatehow a firm’s decision in favor of, or against, financing new positive NPV projects, depends on the availability of internalcash flows and to what extent they are dependent on the discretion of managers making investment decision. For a given firm, cash flow shocks result in expectations formation about future cash flows. If a firm experiences a positive cash flow shock, it is more likely for the said firm to positively change its expectations about future cash flows. In case of a negative cash flow shock, the firm is likely to expect more negative cash flows in future. The availability of finance, literature tells us, is not merely a function of supply but rather it is the cost on which a firm is able to obtain financing. In case of firms working in Pakistan, a majority of firms should face, in this regard, a financial constraint weakening their ability to extend their operations or start new projects. This constraint may emerge from the fact that compared to developed economies such as United States, the market is highly characterized by information asymmetries. On the other hand, the agency theory states that agents often make those decisions that do not necessarily reflect the interests of the principals. Tthis should also be true for the investment decisions. This research aims toinvestigate on which of the above two factors does the investment decisions depend or whether both of these factors can be thought of as a collective force that determines where and when the investments are made.
The effect of concern about reported income on discretionary spending decisions
(University of Management and Technology Lahore, 2016) Abdul Wahid
A lot of research has been conducted in foreign countries on research and development, but in Pakistan a much research well not be conducted in the area of R&D actions through discretionary spending decision. Prior research disclosed the R&D expense through firms SFAS NO. 2 Skaife et al, (2013). In this study under the IAS 38 to highlights the firm’s manager allocate the funds for R&D investment through discretionary spending decisions to improve the firm performance, and was investigated to R&D impact of firm profitability. Researcher for this study was select the sample of 100 firms from non-financial sectors which are listed in Pakistan Stock Exchange. The researcher will use the STATA 12 and MS excel 2013 for statistical analysis. In 1st model researcher was investigated the profitability positive and significant relationship with R&D. Simultaneously R&D effecting of the company profits and growth Branch (1974). It was determine the advertising negative and significant relationship with research and development (R&D).Both advertising and R&D are contributing of the firm future growth Debruine et al, (2011).Firm age is negative and significant relationship existed with R&D. Might to be low support of fund depends upon managerial behavior Branch (1974). Labor intensity strong insignificant and negative relationship with R&D. Labor intensity positive correlated with research and development R&D Narayanan (2015). Multinational affiliation is positive and significant relationship with research and development (R&D). Researcher to check the individual relationship, the profitability and multinational affiliation positively and significant relationship with research and development (R&D). And advertising, firm age and labor intensity is negative and insignificant relationship with R&D. In model 2ndthere is strong relationship and significant between R&D and profitability. Research and development (R&D) strongly impact of profitability within group of companies Sores et al, (2014). Advertising had shown the positive and significant association with R&D. Advertising increase the firm profitability and growth Bhagwat et al, (2011). Firm age is positive and significant relationship existed between firm age and profitability. Labor intensity positive insignificant relationship with profitability. There is positive and insignificant relationship between multinational affiliation and profitability. Scholars are providing a strong evidence labor intensity increase the innovation and profitability activities Suarez et al, (1999). Researcher to check the individual relationship, R&D, firm age and multinational affiliation is positively and significant relationship with profitability. There is positive but insignificant relationship between advertising and profitability. In 3rd model Intangible asset is positive and significant relationship with profitability. Third model shown the positive relationship between intangible asset and profitability Branch (1974). Change in intangible asset is strong negative and insignificant relationship with profitability. Subsidies is an important factor to decrease the cost of capital an increase the R&D investment events. The Korean firms increase the firm productivity and research and development (R&D) expenditures through Government subsidy (Vonortas et al, 2013). Investigate the tax credit to increase the R&D expense (Reenen et al, 2000).The market structure play a vital role in industry growth. The firms in existing market structure rather than other industry structure to increase the profit in R&D investment (Mirman et al, 2003)
Running head: Determinants of dividend pay out ratio of companies
(University of Management and Technology, 2016) Muhammad Waqar Akram
The Cement sector has been most attractive sector in both Pakistanand India for investment prospects.The Governments of both countries are investing in different types of infrastructure facilities which will boost cement sector ultimately. The objective of this study is to find the factorswhose decide the dividend policy of cement sector of Karachi Stock Exchange (KSE)&Bombay Stock Exchange (BSE). The dividend payout ratio (Cash Dividend/Net Profit) has been used as dependent variable and leverage (Debt/Equity), liquidity (Current ratio), profitability (Net Profit), investment opportunity (retained earnings/total assets) as independent variables and size (total assets), growth (Sales growth) and tangibility (Fixed assets/total assets) as control variables.The data has been extracted from annual reports of 40 companies (17-KSE and 23-BSE)from 2009 to 2015.The regression analysis with fixed and random effect used.The results show that profitability, liquidity have positive and significant effect on dividend payout ratio and Leverage, investment opportunity have negative impact on dividend payout ratio. Size, growth and tangibility also have direct relation with dividend payout ratios. The tangibility has significant effect in KSE only whereas in BSE, it is not effecting significantly. The BSE companies are paying dividend more consistentlythan KSE Companies.

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