Energy crisis, firm profitability, and productivity: An emerging economy perspective
Energy shortage has a significant effect on businesses in developing countries. To overcome energy crises, such countries are adopting different strategies in their industrial sectors. This study contributes to the existing literature by analyzing the impact of energy crises on the profitability and...
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| Format: | Article |
| Language: | English |
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Elsevier
2022-05-01
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| Series: | Energy Strategy Reviews |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2211467X22000475 |
| _version_ | 1817977406997135360 |
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| author | Jian Xu Muhammad Akhtar Muhammad Haris Sulaman Muhammad Olivier Joseph Abban Farhad Taghizadeh-Hesary |
| author_facet | Jian Xu Muhammad Akhtar Muhammad Haris Sulaman Muhammad Olivier Joseph Abban Farhad Taghizadeh-Hesary |
| author_sort | Jian Xu |
| collection | DOAJ |
| description | Energy shortage has a significant effect on businesses in developing countries. To overcome energy crises, such countries are adopting different strategies in their industrial sectors. This study contributes to the existing literature by analyzing the impact of energy crises on the profitability and productivity of 424 non-financial listed companies in Pakistan over the period 2001–2017. The fixed effect (FE) is used as a basic regression technique, while generalized method of moments (GMM) is used for the robust analysis. Seven measures, in which four measures of electricity shortfall (i.e., neutral period (NP), increasing shortfall (IS), worst shortfall (WS), decreasing shortfall (DS), energy consumption (EC), energy price (EP), and access to electricity (ATE)) were applied to examine their impact on profitability, that is, return on asset (ROA), return on equity (ROE), and productivity, that is, asset turnover ratio (ATO). The results confirmed the negative impact of energy crises on business profitability, where IS, WS, and DS significantly reduce profitability by 39%, 36%, and 33%, respectively. In addition, NP exerts a significantly positive impact on profitability, where a 1% increase in NP increases profitability by 33%. The results concluded that energy supply is highly critical for business profitability and productivity. This study puts forward several key policy implications that may be helpful for policymakers to overcome energy crises. |
| first_indexed | 2024-04-13T22:16:00Z |
| format | Article |
| id | doaj.art-e86a769bec274869a5a7f3238f5e812a |
| institution | Directory Open Access Journal |
| issn | 2211-467X |
| language | English |
| last_indexed | 2024-04-13T22:16:00Z |
| publishDate | 2022-05-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Energy Strategy Reviews |
| spelling | doaj.art-e86a769bec274869a5a7f3238f5e812a2022-12-22T02:27:33ZengElsevierEnergy Strategy Reviews2211-467X2022-05-0141100849Energy crisis, firm profitability, and productivity: An emerging economy perspectiveJian Xu0Muhammad Akhtar1Muhammad Haris2Sulaman Muhammad3Olivier Joseph Abban4Farhad Taghizadeh-Hesary5School of Economics and Management, Qingdao Agricultural University, Qingdao, ChinaSchool of Finance and Economics, Jiangsu University, Zhenjiang, China; Corresponding author. School of Finance and Economics, Jiangsu University, Zhenjiang, China.Institue of Banking & Finance, Bahauddin Zakariya University, Multan, PakistanCollege of Management, Shenzhen University, Shenzhen, ChinaSchool of Mathematical Science, Institute of Applied Systems and Analysis (IASA), Jiangsu University, Zhenjiang, ChinaSchool of Global Studies, Tokai University, Japan; TOKAI Research Institute for Environment and Sustainability (TRIES ), Tokai University, JapanEnergy shortage has a significant effect on businesses in developing countries. To overcome energy crises, such countries are adopting different strategies in their industrial sectors. This study contributes to the existing literature by analyzing the impact of energy crises on the profitability and productivity of 424 non-financial listed companies in Pakistan over the period 2001–2017. The fixed effect (FE) is used as a basic regression technique, while generalized method of moments (GMM) is used for the robust analysis. Seven measures, in which four measures of electricity shortfall (i.e., neutral period (NP), increasing shortfall (IS), worst shortfall (WS), decreasing shortfall (DS), energy consumption (EC), energy price (EP), and access to electricity (ATE)) were applied to examine their impact on profitability, that is, return on asset (ROA), return on equity (ROE), and productivity, that is, asset turnover ratio (ATO). The results confirmed the negative impact of energy crises on business profitability, where IS, WS, and DS significantly reduce profitability by 39%, 36%, and 33%, respectively. In addition, NP exerts a significantly positive impact on profitability, where a 1% increase in NP increases profitability by 33%. The results concluded that energy supply is highly critical for business profitability and productivity. This study puts forward several key policy implications that may be helpful for policymakers to overcome energy crises.http://www.sciencedirect.com/science/article/pii/S2211467X22000475Energy crisesEnergy consumptionEnergy pricePakistanFirm's profitability and productivity |
| spellingShingle | Jian Xu Muhammad Akhtar Muhammad Haris Sulaman Muhammad Olivier Joseph Abban Farhad Taghizadeh-Hesary Energy crisis, firm profitability, and productivity: An emerging economy perspective Energy Strategy Reviews Energy crises Energy consumption Energy price Pakistan Firm's profitability and productivity |
| title | Energy crisis, firm profitability, and productivity: An emerging economy perspective |
| title_full | Energy crisis, firm profitability, and productivity: An emerging economy perspective |
| title_fullStr | Energy crisis, firm profitability, and productivity: An emerging economy perspective |
| title_full_unstemmed | Energy crisis, firm profitability, and productivity: An emerging economy perspective |
| title_short | Energy crisis, firm profitability, and productivity: An emerging economy perspective |
| title_sort | energy crisis firm profitability and productivity an emerging economy perspective |
| topic | Energy crises Energy consumption Energy price Pakistan Firm's profitability and productivity |
| url | http://www.sciencedirect.com/science/article/pii/S2211467X22000475 |
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