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Financial Institutions and Chinese Investment: The Review of China Pakistan Economic Corridor (CPEC) Policy

Author

Listed:
  • Samreen Fahim Babar

    (Bahria University Islamabad Pakistan)

  • Yasir Zeeshan

Abstract

China Pakistan Economic Corridor (CPEC) initiates different energy projects, infrastructure ventures and business economic zones within Pakistan. The extensive Chinese investment, worth -62 billion, have long-term impacts on the economy as well as financial institutions of Pakistan. The banking economy are probable to generate an innovative stream of revenues, in the future outlook under CPEC projects. This study is significant in gauging the financial institutions performance and value creation, under CPEC policy. It will enables the institutions in realizing their future planning strategies and achieving their corporate goals. This study contributes in estimating the performance of financial institutions through shareholder value creation, under the CPEC policy in Pakistan. The analyses of this study was furnished by incorporating panel data techniques. The time span of the study is taken since the inception of CPEC agreement i.e. 2012 to 2016. The identification of financial institution`s value creation dynamics, is also one of the major contribution of this study. The paper analysis demonstrates that leverage, dividend policy, and return on equity has statistically significant effect on financial institution`s shareholder value. Moreover, the study results reveals that CPEC does have significant effects on the Pakistan`s financial institutions value creation.

Suggested Citation

  • Samreen Fahim Babar & Yasir Zeeshan, 2018. "Financial Institutions and Chinese Investment: The Review of China Pakistan Economic Corridor (CPEC) Policy," European Journal of Economics and Business Studies Articles, European Center for Science Education and Research, vol. 4, EJES May-.
  • Handle: RePEc:eur:ejesjr:254
    DOI: 10.2478/ejes-2018-0040
    as

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    File URL: http://journals.euser.org/index.php/ejes/article/view/3430
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    File URL: http://dx.doi.org/10.2478/ejes-2018-0040
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    References listed on IDEAS

    as
    1. Muhammad Arshad Khan & Sajawal Khan, 2007. "Financial Sector Restructuring in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 12(Special E), pages 98-125, September.
    2. Ya’u M. Damagum & Abdulrasheed Balogun & Emmanuel Ib Chima, 2015. "An Empirical Investigation into Determinants of Shareholders Value Creation among Banks in Nigeria," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 4(6), pages 345-353.
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    6. Radić, Nemanja, 2015. "Shareholder value creation in Japanese banking," Journal of Banking & Finance, Elsevier, vol. 52(C), pages 199-207.
    7. Fama, Eugene F & French, Kenneth R, 1995. "Size and Book-to-Market Factors in Earnings and Returns," Journal of Finance, American Finance Association, vol. 50(1), pages 131-155, March.
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    9. Fiordelisi, Franco & Molyneux, Phil, 2010. "The determinants of shareholder value in European banking," Journal of Banking & Finance, Elsevier, vol. 34(6), pages 1189-1200, June.
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