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The Impact of Macroeconomic Factors on the Firm’s Performance—Empirical Analysis from Türkiye

Author

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  • Orkhan Ibrahimov

    (Doctoral School in Economic and Regional Sciences, Hungarian University of Agriculture and Life Sciences, Kaposvár Campus, 7400 Kaposvár, Hungary)

  • László Vancsura

    (Department of Agricultural Logistics, Trade and Marketing, Institute of Agricultural and Food Economics, Hungarian University of Agriculture and Life Sciences, 7400 Kaposvár, Hungary)

  • Anett Parádi-Dolgos

    (Department of Investment, Finance and Accounting, Institute of Rural Development and Sustainable Economy, The Hungarian University of Agriculture and Life Sciences, 7400 Kaposvár, Hungary)

Abstract

Measuring financial performance is pivotal not only for assessing a firm’s current health but also for informing strategic decisions that shape its long-term trajectory. This study investigates how macroeconomic volatility affects the firm profitability across five major sectors in Türkiye—industrial manufacturing, food, beverage and tobacco, chemicals and plastics, technology, and energy—during the turbulent period from 2016 to 2023. Using return on assets (ROA) and return on equity (ROE) as performance indicators, we apply panel data regression to test the impact of inflation, interest rates, unemployment, and a novel Macroeconomic Stress Index (MSI), which combines inflation and exchange rate volatility. The results reveal significant sectoral differences: firms in chemicals and manufacturing outperformed others in ROA, likely benefiting from export incentives and scale efficiencies, while energy and food sectors underperformed, constrained by regulations and cost rigidity. Notably, MSI showed a consistent and significant positive effect on both ROA and ROE, suggesting that many firms responded to macroeconomic stress by restructuring operations and improving efficiency. In contrast, interest rates had a strong negative effect on profitability, confirming the sensitivity of firms to financing costs. These findings underscore the need for targeted sector-level policy support and highlight the importance of internal adaptive capabilities in maintaining the firm’s performance under sustained economic stress.

Suggested Citation

  • Orkhan Ibrahimov & László Vancsura & Anett Parádi-Dolgos, 2025. "The Impact of Macroeconomic Factors on the Firm’s Performance—Empirical Analysis from Türkiye," Economies, MDPI, vol. 13(4), pages 1-21, April.
    • Handle: RePEc:gam:jecomi:v:13:y:2025:i:4:p:111-:d:1636807
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    References listed on IDEAS

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    3. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
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