Impact of Macro Economic Variables on Return on Assets of Textile Industry of Pakistan



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Submitted Nov 17, 2020
Published Dec 15, 2020
10.24018/ejbmr.2020.5.6.600

Abstract viewed = 1304 times

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The aim of this study was to find the impact of Inflation rate, Interest rate, Foreign direct investment, Trade openness and Exchange rate on Return of assets of textile weaving sector of Pakistan during the period of 1997 to 2019. The Dependent variable was Return on Assets while Inflation rate, Interest rate, Foreign direct investment, Trade openness and Exchange rate were independent variables, Data for the study was obtained from secondary sources like World Development Indicator, Pakistan Stock exchange and financial stability review issued by State Bank of Pakistan during 1997 to 2019. ROA were collected from Annual reports of the selected textile businesses (weaving sector). The results of Co-integration indicated the long run relationship among the variables. However, inflation rate, interest rate and exchange rate have positive and significant impact on return on Assets of textile weaving sector of Pakistan, on the other hand Foreign direct investment and Trade openness have insignificant effect on Return on assets of textile weaving sector of Pakistan. This paper is limited to linear framework some results may be sensitive to non-linearities, a non-linear frame work should be included in future research.

Keywords: Return on Assets, Inflation Rate, Interest Rate, Foreign direct investment, Trade openness and Exchange Rate

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