THE IMPACT OF GOVERNMENT FINANCIAL ASSISTANCE ON FIRMS’ PERFORMANCE: EMPIRICAL EVIDENCE FROM TEXTILE SECTOR OF PAKISTAN

Abstract

Purpose Thisstudy addresses the impact ofGovernment FinancialAssistance onperformance ofafirm. Textile sector ofPakistan has been analyzed in the study. Textile Sector contributes a significant share in economic growth and gross domestic product (GDP) ofPakistan. The author measures the performance ofafirm (Sales, Profitability and Exports) and the impact ofGovernment Financial Support (Easy Financing Schemes, Tax Rebates or Subsidies) on it. Methodology & Design Companies from textile sector of Pakistan, which are listed in Pakistan StockExchange (PSX) have been analyzed. Thisstudy usesfirm-levelpanel data over afive-year periodfrom the financial statements / annual reports published by the companies. Panel least square method has been used in the study. Findings Results suggests that government financial assistance has significant impact performance ofafirm. And similarly exports sales andprofitability has significant impact firms'performance. Limitations The study usedpanel data onlyfrom listedcompanies oftextile sector ofPakistan, so thefindings ofthe study might not represent the whole sector. The initial impact and results of this study may undergo changes captured on annual basis and may subject to change with passage oftime. There is also a possibility that more time may be needed to see its longer term impact. Recommendations This study suggests thatfurther research on textile sector including listed and non-listed companies and other sectors beyond textile sector should be done to make a general conclusion about the impact ofgovernmentfinancial support on,firms'performa in Pakistan