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Development Financing And Economic Governance: Analysis Of The Liquidity Crisis And Circularity Debts In Pakistan

Author

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  • Dr.Muhammad Irfan Khan

    (Iqra University Main Campus, Karachi)

  • Dr.Muhammad Ayub Khan Mehar

    (Iqra University Main Campus, Karachi)

  • Dr.Athar Iqbal

    (Iqra University Main Campus, Karachi)

Abstract

Purpose This paper is based on the models derived by the researchers to explain the patterns of corporate governance, firms’ financial policies and liquidity position.Methodology A deductive approach has been adopted to reconcile and examine the different models of corporate governance and firms’ financial policies.Findings The study showed that corporate savings is a good predictor of the macro level investment in a country.The magnitude of national investment will increase by improvement in corporate savings.In fact the corporate savings indicate the expansion in business activities which may be an indicator of the trust and confidence of private sector.On the other hand it explains the financial health of corporate sector, which may provide the significant portion of tax revenue to the government for developing projects in public sector.The study has concluded that corporate governance is a significant variable in determining the liquidity and circularity debts.In this way corporate governance becomes a crucial determinant of the national investment.ImplicationsThe bad corporate governance may deteriorate the investment activities at national level, which may damage the economy for a longer term.This study also indicates that capital structure and the patterns of ownership play important role in the determination of corporate governance of an institution.

Suggested Citation

  • Dr.Muhammad Irfan Khan & Dr.Muhammad Ayub Khan Mehar & Dr.Athar Iqbal, 2016. "Development Financing And Economic Governance: Analysis Of The Liquidity Crisis And Circularity Debts In Pakistan," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 12(2), pages 1-24.
    • Handle: RePEc:aib:ibtjbs:v:12:y:2016:i:2:p:1-24
    DOI: https://doi.org/10.46745/ilma.ibtjbs.2016.122.1
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    References listed on IDEAS

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    1. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    2. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    3. P. J. Lund & K. Holden, 1968. "An Econometric Study Of Private Sector Gross Fixed Capital Formation In The United Kingdom, 1923–1938," Oxford Economic Papers, Oxford University Press, vol. 20(1), pages 56-73.
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