External Financial Resource Management by Listed Pakistani Firms

Attiya Y. Javid, Robina Iqbal


Enterprises need finance for investment and acquire it either
by internally generated finance or externally generated finance, which
are closely related to the ownership structure, financial market
development and enforcement of law of a country. In underdeveloped
companies with foreign owners have an advantage in their access to
external finance as compare to domestically owned companies because
their financial resources coming from abroad. Access to external finance
is a key determinant of a firm’s ability to develop, operate, and
expand. Economic researchers have studied how various macroeconomic and
microeconomic factors influence such access; for example, it has been
shown that the need of external finance to depend on the macroeconomic
environment, since economic downturns tend to limit firms’ ability to
borrow and banks’ willingness to lend. This “credit channel” research
argues that corporate access to credit is the principal mechanism
linking monetary policy and the real economy. At the micro level,
research has shown that characteristics specific to a firm influence the
degree to which macroeconomic changes affect its access to external
financing; specifically, firms that are more vulnerable financially—such
as smaller, younger, riskier, and more indebted firms—are found to be
more affected by tighter monetary policy.

Full Text:


DOI: https://doi.org/10.30541/v46i4IIpp.449-464


  • There are currently no refbacks.