Journals of UMT (University of Management and Technology, Lahore)
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Impact of the Yield Spread on Economic Contraction in Pakistan: An Adverse Relationship
Full text linkThe yield spread has a positive association with future economic expansion, up to a certain extent. An inverted yield curve is recognized as a potential indicator of economic contraction. This study aims to examine the impact of the yield spread, calculated as the difference between the weighted average rates of return on 5-year deposits and the 3-month rates of return, on the economy of Pakistan. To measure the contraction and expansion probabilities, Hamilton's (1989) Markov switching model is used. Afterwards, the impact of yield spread on economic contraction is analyzed by applying the ARDL bounds testing approach, based on 40 years of data ranging from 1980 to 2020. The findings indicate a positive association among the yield spread and the probability of contraction. Therefore, this study suggests that whenever there is an increase in yield spread, economic contraction rather than growth is expected. Whereas, control variables such as migration and foreign direct investment (FDI) reduce the chances of economic contraction. On the contrary, an increase in the price level increases its probability
Unpacking Satisfaction Factors in Prime Minister’s Youth Business Loan (PMYBL) Scheme: A Beneficiary Impact Analysis
Full text linkMicrocredit is a program that has gained widespread attention due to its potential to enhance the socioeconomic wellbeing of individuals. However, assessing the impact of microcredit on wellbeing requires the consideration of various welfare indicators and measurements. This study focuses on evaluating the impact of the Prime Minister’s Youth Business Loan (PMYBL) scheme on the socioeconomic wellbeing of the borrowers in Islamabad and Rawalpindi, Pakistan. For this purpose, it employs a questionnaire to collect responses from 120 microcredit beneficiaries using random sampling technique. Descriptive statistics and non-parametric tests are used for data analysis. The findings indicate that the PMYBL scheme has significantly increased the income of poor households and consequently improved their living standards. Moreover, the beneficiaries remain satisfied with the loan facilities provided by the scheme. The results support the notion that microcredit has a positive impact on wellbeing, as increased income leads to improvements in education, access to better health facilities, and the betterment of overall living standards. In addition, increased income enables households to enhance their consumption patterns, increase savings, and acquire assets. Overall, the study concludes that the PMYBL scheme has a significant impact on the socioeconomic conditions of the borrowers. Indeed, microcredit investments in enterprises have the potential to improve socioeconomic conditions and enable the poor to become entrepreneurs. This study adds to the existing literature on the positive effects of microcredit on the wellbeing of borrowers and provides insights into the potential of such programs for poverty reduction
Analysis of Higher Education Reforms in Pakistan: A Public Management Perspective
Full text linkThe current study aimed to analyze higher education reforms in Pakistan from the perspective of public management approaches, traditional public administration, NPM, network governance, and new Weberian. Moreover, the study analyzed higher education reforms to situate and locate them in the context of wider international public management imperatives that have given rise to them. Additionally, the current study argued that higher education reforms in Pakistan have been intricately linked with the increasing globalization of the world which is also a cause of decrease in state autonomy. Multiple case study approach was employed to conduct the current study. The data was collected through semi-structured interviews with designated stakeholders of the reform process. Six universities and HEC head office were selected to collect the data. Document analysis and member checks were also used to triangulate the data collected through semi-structured interviews. After the data analysis, findings revealed the complexity of higher education reform process in Pakistan due to the presence of a hybrid structure of public administration paradigms. In a nutshell, the current research employed a public management investigative approach to study higher education reforms pertaining to their goals, design, instruments, implementation, evaluation, and outcomes in terms of strength and weaknesses in higher education in Pakistan
The Effect of Multidimensional Aspects of Monetary Policy of SBP on the Large Scale Manufacture
Full text linkThe current study empirically investigated the multidimensional aspects of information pertaining to the monetary policy of the State Bank of Pakistan (SBP). This policy comprises monetary policy statements (MPS) published by Monetary Policy Committee (MPC) and policy rate. Monetary Policy Department (MPD), one of the core policy related departments of the State Bank of Pakistan (SBP), provides informative and analytical support for the formulation, dissemination, and implementation of the bank's monetary policy. The tone and effect of monetary policy communication was investigated on macroeconomic variables, fiscal variables, and financial variables, that is, inflation, policy rate, credit intake, LSM, imports, exports, and trade deficit. The analysis was carried out by using time series data collected from MPS over the time period 2005-2021. The empirical model was estimated by using Granger causality test and Autoregressive Distributed Lag (ARDL) technique. The results showed a significant and positive relationship between large scale manufacturing (LSM) and policy rate and vice versa. The study provided specific evidence to policymakers that would help them to improve and further enhance their transparency and credibility regarding monetary policy formulation. Furthermore, this research would also help the SBP to review the policies and incorporate key components and its imply that the SBP’s adoption of a market-based flexible exchange rate would increase the efficiency of the exchange rate channel used to transmit monetary policy
Economic Welfare and the COVID-19 Pandemic in Nigeria: An Overview of the First Half of 2020
No full textCorona virus pandemic is a current misery not only to health status but also to economic wellbeing and to the world at large. This study examines the relationship between the pandemic outbreak and economic welfare using daily data on proximate economic welfare measures-real Gdp and changes in consumer price index-and the disease indicator variables-discharge rate, fatality rate, spread rate and number of tested cases. The Prosperity theory is adopted and the estimation issue is rooted from the robust least squares technique due to the failed normality assumption of the conventional least squares. Results indicate that corona virus due to its spread lowers labour supply and causes production shortages and subsequently results in hike in price and loss of real income value. High discharge rate can increase real income value and hence economic welfare. Immediate Financing, regulatory, equity and diversification strategies are needed to revive the Nigerian economy
Time-frequency Volatility Spillovers of Conventional Stock Markets: Evidence from Developed, Emerging, and Frontier Markets
Full text linkThis study examines the volatility spillovers and financial connectedness of conventional equity stock markets in developed, emerging, and frontier economies in GCC, SAARC, BRIC, and G7. Diebold and Yilmaz (DY-12) and Baruník and Krehlík (BK-18) spillover methods are used to analyze the daily data for the period 2012-2021. The findings indicate that the coronavirus pandemic significantly affected return and volatilities in conventional stock markets, surpassing any previous economic instability event, such as the 2014-2015 crude oil crisis. The findings also reveal that conventional stock markets are weakly interconnected in terms of overall return, with the US stock market being the top transmitter of returns and volatility. These findings have significant policy implications for investors, regulators, and policymakers
Impact of Profitability on Trade Credit Supply of Pakistani Firms: A Moderating Role of Financial Distress
Full text linkThis research aims to elucidate the relationship between trade credit (supply) and the profitability/growth of non-financial companies in Pakistan. The 386 unbalanced panels listed in Pakistan Stock Exchange between 2004 and 2017 are analyzed through GMM with 3976 annual observations. The research indicated the insignificant relationship between profitability and growth with the net trade credit of non-financial companies. On the other hand, net trade credit positively correlates with return on equity, company size, and age. Financial distress has a significant moderating effect on net trade credit, and firms need to increase return on equity and growth to overcome financial distress
Inflation Forecasting Under Different Macroeconomic Conditions: A Case Study of Pakistan
Full text linkInflation forecasting has been important task for monetary authorities, policy makers and government. Prediction about inflation confer us a precise image of how the economy is expected to accomplish in the future. It is essential job for researchers to examine which methods are suitable for inflation forecasting. We have used Naive model, ARIMA model, Philips curve model and Philips Curve (TAR) under different macroeconomic conditions with reference to real-time, revised and final data from 1974 to 2014 and predicted out-of-sample inflation forecast for 2015, afterward we roll-forward our regression from 1975 to 2015 to forecast inflation for 2016.We have analyzed naive model is superior to other modelsbecause RMSE and MAE of naive model are less than other models by using real-time, revised and final data for one year-ahead out-of-sample inflation forecasting. On the other hand for two years ahead out of sample inflation forecast, according to real-time data RMSE shows that naive model is most superior to other models whereas MAE shows that Philips curve Threshold auto regressive model is most superior to other models. According to revised and final data for two years ahead out of sample inflation forecasting both forecasting accuracy measures shows Naive model is most superior to other models
How Core Labor Standard and Informal Sector Employment Effect the Economic Growth?
Full text linkAt present time, the phenomenon of core labor standards and informal sector employment entice attention in the economic growth paradigm. This study elaborates the influence of core labor standards on the economic growth of Pakistan in the presence of informal sector employment. For this purpose, the human capital augmented solow growth model proposed by (Mankiw et al. 1992) is extended by adding core labor standards and informal employment. The aggregate time series data set is used for the time span (1999-2017). To resolve the endogeneity problem, the non- linear two stage least square instrumental variable (NLTSLS-IV) approach is applied to estimate the growth model. The estimated outcome elaborates the positive relation of core labor standards with the economic growth. The relation between the growth rate of both formal and informal employment is positive with economic growth. The conclusion is that the enforcement of core labor standards increase the economic productivity through protecting workers rights and will ultimately enhances the economic growth. The policy maker should consider the phenomenon of labor standards enforcement in the growth policies of the economy
MODELLING VOLATILITY OF SUB-INDICES RETURNS OF NIGERIAN STOCK EXCHANGE USING GARCH MODEL.
Full text linkThe paper examined the weekly returns of six sub-indices of the Nigeria Stock Exchange; Banking, Consumer goods, Insurance, Oil/Gas, Pension and Industrial goods indices from 2nd September 2020 to 28th February 2022. The returns were stationary at level and not normally distributed. Ljung-Box Q statistic and Ljung-Box Q2 statistics of power transformed using power 0.25, 0.5 and 0.75 for conditional heteroscedasticity for lags of 6, 12 and 20 indicates the presence of conditional heteroscedasticity in all indices returns. The study found that volatility was more persistent in APARCH model than the GARCH model. Comparatively, volatility was more persistent in Industrial goods index followed by Banking, Pension, Consumer goods, Insurance and Oil/Gas in GARCH model while volatility was more persistent in Consumer good index followed by Insurance, Pension, Industrial goods, banking and Oil/Gas in APARCH model respectively. However, Oil/Gas has the least volatile in both models. Also, there exist leverage effects in all the six indices' returns and the APARCH model is the best model for estimating and forecasting purposes for all the indices