Policy Intervention and Financial Sustainability in an Emerging Economy: A Structural Vector Auto Regression Analysis

The purpose of the study is to observe the impact of policy intervention on financial sustainability using the structural vector autoregression (SVAR) analysis. The population of the study is the manufacturing sector of Pakistan, which is an emerging economy. Data for 249 firms operating in the manu...

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Bibliographic Details
Published in:Frontiers in psychology 2022-08, Vol.13, p.924545
Main Authors: Ahmed, Sarah, Ellahi, Nazima, Waheed, Ajmal, Aman, Nida
Format: Article
Language:English
Subjects:
financial sustainability
financialization
firm performance
impulse response function
Psychology
R software
SVAR
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Summary:The purpose of the study is to observe the impact of policy intervention on financial sustainability using the structural vector autoregression (SVAR) analysis. The population of the study is the manufacturing sector of Pakistan, which is an emerging economy. Data for 249 firms operating in the manufacturing sector are taken, collected from Datastream from 2005 to 2019, with total observations of 2,400. To conduct the analysis, R software is used for its better visualization. Results show that firm performance, corporate governance, and sectoral policies have a positive and long-term impact on financial sustainability, whereas earning management and financialization not only have a negative impact, but this impact affects the operations of the corporate for a longer period. This study would be helpful for policymakers as it gives a framework for financial sustainability based on the policies and strategies developed by the sector.
ISSN:1664-1078
1664-1078
DOI:10.3389/fpsyg.2022.924545