Full Text Articles
The Lahore Journal of Business, Volume 9, Issue 2, Oct - Mar 2021
Fouzia Hadi Ali, Javeria Barkaat, Majid Ali and Muhammad Aamir
The Lahore Journal of Business, Volume 9, Issue 2, Oct – Mar 2021, pages , 1-17 https://doi.org/10.35536/ljb.2021.v9.i2.a1
By using the Autoregressive Distributed Lag (ARDL), and the Emerging Market Z-Score Model, we have examined the performance and factor of riskiness of Pakistan’s asset management companies, for the years pertaining to 2013-2018. Moreover, we also tested the stability of the ARDL model. The findings reveal that microeconomic and macroeconomic factors have a long-run impact on the performance of asset management companies (AMCs). Besides this, the Emerging Market Z-Score Model also categorizes the asset management industry in the safe zone, which indicates that the industry has no probability of default. This study was delimited to Pre-COVID data available for asset management companies that were taken into consideration. We can arguably conclude that the Post-COVID performance, and riskiness of AMCs might have inconsistent outcomes with our study. This study’s findings may encourage, and aid investors, fund managers, and market makers to revisit their long-term investment patterns, keeping in mind the post-COVID short term volatility dynamics of the industry, which was the primary limitation of this study.
Shehla Qaiser, Muhammad Adnan Bashir, Muhammad Yasir and Syed Muhammad Fahim
The Lahore Journal of Business, Volume 9, Issue 2, Oct-Mar 2021, pages, 19-40 https://doi.org/10.35536/ljb.2021.v9.i2.a2
Online customer brand engagement (OCBE) has become an important relationship marketing construct within the realm of academics, as well as with practitioners. The emanating literature on OCBE offers diverse definitions, but those that are often presented without a mutual agreement. The extant literature based on this particular discipline primarily focused on the aspect of relationship marketing, with respect to retaining customers. But with the addition of customer engagement, it was not only confined towards maintaining customer retention, but also ventured into the subject of attracting new customers. This paper aims to validate a nomological set of theoretical relationships that include OCBE, brand involvement (BI), and emotional brand engagement (EBA). It provides a new outcome, EBA that has also been suggested in the previous studies. Also, it is noteworthy that this study has undertaken before brand usage intent that is used as a valid outcome. This study is exploratory in nature, and is limited to a base of customers who are engaged with a brand, by simply liking it on Facebook. In this regard, a survey of 302 respondents provided data, by resorting to purposive sampling between the age groups of 18 – 55 years. Brand involvement is an antecedent of OCBE, and emotional brand attachment (EBA) was the outcome that was achieved. A further validation of this outcome was done through the mediation analysis, which concluded that only the affective dimension of OCBE had a mediating effect on the EBA. The affective dimension of OCBE has the most effect on the outcome variable EBA, as compared to the cognitive processing and activation dimensions of OCBE. This study concluded that marketers could perhaps devise social media strategies, in order to engage customers through emotions, and as a result help increase customer retention and loyalty.
Aamir Shahzad, Tahir Mahmood and Mehwish Shahzad
The Lahore Journal of Business, Volume 9, Issue 2, Oct-Mar 2021, pages, 41-78 https://doi.org/10.35536/ljb.2021.v9.i2.a3
The main aim of this paper is to investigate the efficiency, change in productivity, and the sources of efficiency in the commercial banking sector of Pakistan and India. For this purpose, the performance analysis has been referred to, so as to verify the core-essence of the technical gains in efficiency, the role of managerial practices adopted, and the utilization of resources by the banking sectors in these two jointly bordered countries of South Asia. The time span that has been referred to for this study, spans from 2013 to 2017. Therefore, the Data Envelopment Analysis (DEA), equipped with its two basic models, which serve the input orientation and Malmquist Productivity Index (MPI) have been used, in order to submit the findings of this study. As compared to the situation in Pakistan, during the time span that has been taken into consideration for the purpose of this study, the Indian banking sector has been able to maintain higher scores, in the three levels of efficiency measures that have been observed. Moreover, the returns to scale analysis suggests that the banks operate at Constant Returns to Scale (CRS), or Increasing Return to Scale (IRS), thus making a positive contribution towards the average efficiency gains. Whereas, the banks that have been functioning at Decreasing Returns to Scale (DRS) happen to cause a decline in the efficiency measures. As far as productivity is concerned, both the countries have shown a positive improvement in the Total Factor Productivity (TFP), over the years. In a gist, the three levels of efficiency, and their sources of inefficiencies, make up the extract of the study. These findings should ideally be focused upon by the managers, practitioners, and policymakers, particularly while designing their operational strategies.
Naveed R. Khan, Zain Ul Abedin and Arsalan Mujahid Ghouri
The Lahore Journal of Business, Volume 9, Issue 2, Oct-Mar 2021, pages, 79-108 https://doi.org/10.35536/ljb.2021.v9.i2.a4
This study investigates the impact of market orientation on brand loyalty, primarily through variables pertaining to the purchase intention and brand image. In order to achieve this aim, this study have resorted to testing the relationships between customer-defined market orientation and purchase intention, and the brand image, leading to brand loyalty. In this regard, the study is quantitative in nature, and uses the cross-sectional design. For this purpose, the primary data were collected from gold jewelry customers (n = 413) from Karachi, Pakistan. Three key findings emerged from the structural model testing. The first finding revealed that the customer, competitor and interventional orientation are positively associated with the purchase intention, brand image and loyalty of gold jewelry customers. Secondly, in simple mediation, the purchase intentions and brand image tend to fully mediate the impact of customer orientation, and competitor orientation on the brand loyalty of gold jewelry customers, while partially mediating the association between the interfunctional coordination and brand loyalty. The third finding revealed that, in parallel to the mediation effect, the impact of customer, competitor and interfunctional orientation on brand loyalty is fully mediated by the purchase intention and brand image. This research is useful for gold jewelry businesses and business owners, since on a comparative level, less research has been conducted in the domestic industry of Pakistan.
Haadiah Yasir, and Syeda Anna Amjad
The Lahore Journal of Business, Volume 9, Issue 2, Oct-Mar 2021, pages, 109-140 https://doi.org/10.35536/ljb.2021.v9.i2.a5
The purpose of this paper is to empirically apply the concept of Carroll’s CSR pyramid, on the buying decisions and behaviors of consumers, particularly when selecting a detergent/washing powder in Pakistan. Here, the packaging origin of the detergents’ brand has been used as the moderating variable. In addition to this, the stakeholder theory has been applied where consumers are primarily expected to be well informed of their buying choices. The study essentially comprises of a household, dropoff cross-sectional survey that has been taken by men or women who do groceries. In this regard, four elite areas of Lahore, Pakistan (DHA, Cantonment, Gulberg, and Model Town) were selected, with the assumption that the residents of these areas might be interested in a CSR initiative, taken by their preferred detergent brands. Also, the participants were selected through the convenience sampling technique, and were given 24 hours to fill the survey, at a time of their convenience. Then, the Structural Equation Modeling (SEM) technique was run on the 280 usable questionnaires that had been acquired. Theresults depicted that the buyers of detergent brandsin Pakistan are mostly attracted towards the three levels of the CSR pyramid; the economic level, the ethical level, and the philanthropic level. Moreover, findings also revealed that the packaging origin of the respective detergent brands significantly moderate the relationship between all levels of the CSR pyramid, as well as the consumer buying behavior of detergent brands, except on the legal and economic levels. This research provides insights into the other, locally packaged detergent (and household) brands, which are currently indulging, and are also interested in carrying out CSR activities. These insights may help organizations to reflect upon how, by using different levels of CSR initiatives efficiently, detergent brands can achieve more sales, with their buyers selecting their particular brand over other competing global brands.
The Lahore Journal of Business, Volume 9, Issue 1, Apr - Sep 2020
Sagheer Muhammad Sehrish Mubeen and Mah Noor Shahzadi
The Lahore Journal of Business, Volume 9, Issue 1, Apr-Sep 2020, pages 1-31, https://doi.org/10.35536/ljb.2020.v9.i1.a1
This study investigates whether the dividend policy (the decision to distribute funds, and the distribution channel preferences) of the banking sector of Pakistan is affected during any periods of domestic and global financial crisis. Using a sample of publically listed commercial banks, between the periods of 2002 till 2015, this research document that, unlike other countries, the banks in Pakistan fail to indicate a decline in the level of funds that are distributed to the investors. Even though the importance of the other means of distribution has increased over time, a major portion of the total payout is still covered by the cash dividends. Moreover, the results of the multinomial logit model, demonstrate that the payout policy of the commercial banks listed on the PSX, is not influenced by the global financial crisis. Furthermore, the analysis reveals that more liquid, profitable, and growth oriented banks have a higher tendency to pay dividends, than the other banks that do not fall in this category. The empirical results also indicate that the signaling hypothesis is a relevant economic phenomenon. These findings provide insights to different stakeholders in developing the relevant policies needed to cope up with crisis situations, such as the current ongoing Coronavirus pandemic.
Naveed Khan, Abdul Rafay and Amer Shakeel
The Lahore Journal of Business, Volume 9, Issue 1, Apr-Sep 2020, pages 33-58, https://doi.org/10.35536/ljb.2020.v9.i1.a2
With it being considered as a value-added activity, the Internal Audit function (IAF) of a firm is one of the most important functions in an organization. During the last decade, the role of this particular function has become very useful, especially in creating awareness regarding the Prevention, Detection and Assessment (PD&A) of fraudulent activities. In many countries, carrying out an Internal Audit is a legal compulsion for public companies, in order to establish an effective, and efficient IAF. This study aims to explore the relationship between the various attributes of IAF (effectiveness, independence, staff training, qualification and experience), and the PD&A of fraudulent activities in Pakistan. For this purpose, the convenient sampling technique, for data collection, is used and the questionnaires are collected from the respondents belonging to Pakistan. The questionnaire has been prepared in the form of a Likert scale. Respondents for this study include (1) staff members working in the Internal Audit (IA), finance and accounting departments of the companies listed on the Pakistan Stock Exchange (PSX), and (2) staff members of firms that are engaged in external statutory audit in Pakistan. Descriptive statistics show the details regarding the demographic questions, IAF and PD&A of the fraudulent activities that take place in the companies. Moreover, in order to get to the effective and relevant results, the regression analysis is performed in order to find out if there exists any relationship between these variables. The results show that all five independent variables positively affect the PD&A of fraudulent activities. However, three of the independent variables (IAE, IAT, and IAQ) are statistically significant, whereas two of the variables taken into account (IAI, and IAE) are statistically insignificant. It is recommended that the IAF should be more independent, and effective so as to attain the required results. Moreover, firms should also focus on the qualifications and proper training of the staff that are responsible for executing the IAF.
Imran Riaz Malik and Attaullah Shah
The Lahore Journal of Business, Volume 9, Issue 1, Apr-Sep 2020, pages 59-85, https://doi.org/10.35536/ljb.2020.v9.i1.a3
Derivatives, and their influence on the dynamics of underlying stock markets, is an interesting topic of debate, which predates their introduction. The unresolved influence of derivatives on their underlying stock markets still intrigues many. In this regard, researchers/stakeholders are still curious about the (de)stabilizing influence of derivatives on the overall market. In disposition of these observations, two contradicting hypothesis have been studied widely and have remained the focus of attention in several theoretical and empirical studies. These hypotheses are explained in several ways. Among many, one explanation refers to the destabilizing influence of derivatives, due to the enhanced involvement of noise traders, after the introduction of derivatives. This aspect remains the topic of discussion for this study. After the formal introduction of the SSFs (Single Stock Futures) in Pakistan, this topic became a cause of concern for the stakeholders of this market as well. Hence, this study attempts to tap into this aspect of the de(stabilization) debate, by proposing a modified version of the famous Sentana & Wadhwani (1982) model. In order to tap the potential shortcomings of the S&W model, this study contributes to the extant literature in several ways: 1) It adds the feature of trading volume in the model to analyze and study the potential movement of noise traders from spot to futures market, due to the ease of trading that the futures markets offer, 2) the new, modified model adds a lagged term for returns in order to tap the potential asynchronous inefficiencies, 3) it considers the Generalized Error Distribution (GED) instead of the Gaussian Distribution, in order to realize the fact that returns are not normally distributed. Generally speaking, the modified version of the model not only extends the original model in terms of its explanation, but also empirically tests this aspect in the Single Stock Futures (SSFs) market of Pakistan. This model tested whether SSFs promote, or inhibit the noise trading post-SSFs. After putting it to test, the newer model did not report any negative or positive impact of the introduction of SSFs on the underlying stocks. This may conclude that the proclaimed (de)stabilizing role of the SSFs, in the context of Pakistan, is not justified. This may also imply that the stringent regulatory frameworks, post the Global Financial Crisis, (GFC) for the resumed SSFs, are not justified and require revision.
Ghulam Saghir and Emad Tabassam Ch
The Lahore Journal of Business, Volume 9, Issue 1, Apr-Sep 2020, pages 83-103, https://doi.org/10.35536/ljb.2020.v9.i1.a4
The main objective of this study is to find out how, the two different types of risks, i.e. Liquidity Risk & Credit Risk, affect the overall profitability/financial performance of commercial banks in Pakistan. We used methods that were applicable on a panel data for long run and short run time specifications. Thirtythree scheduled banks listed with the SBP, as of December 2018 have been used for the purpose of the data analysis. The panel data that is used for this study stretches across a period of 10 years, with 33 cross sections. The findings of this current study revealed that the financial performance of the banks present in Pakistan is negatively, and significantly influenced by the credit risk. In addition to this, it was revealed that the lesser the non-performing loans, the lower the risk factor that is experienced. The financial risk comprising of credit risk and liquidity risk tends to have a significantly robust impact on the overall enactment of the commercial banks in Pakistan. This study will prove beneficial for the top management of the financial institutions developing economies, as it will enhance their existing knowledge regarding the impact of financial risk, which will eventually infiltrate into the intensity and quality of the financial performance of the banks. This will also enable banks, and other financial institutions to involve all the relevant stakeholders, in order to determine how they can minimize the effects of the financial risk, so as to maximize the overall returns.
Ramla Sadiq and Safia Nosheen
The Lahore Journal of Business, Volume 9, Issue 1, Apr-Sep 2020, pages 105-144, https://doi.org/10.35536/ljb.2020.v9.i1.a5
This paper carries out the empirical tests in order to validate the hypothesis that resource intangibility, in the form of intangible assets, contributes towards the intellectual capital, and the competitive advantage in the banking sector. Furthermore, it also determines whether the intangibility of a banks’ resources contribute towards the sustainability of the competitive advantage. Finally, it determines which aspects of the banking performance, the intangible assets actually contribute to. In this context, this research utilizes the secondary data, which is extracted from the annual reports of commercial banks that are listed on the primary stock exchanges of Pakistan. The sample that is taken into consideration is divided into two main categories in order to carry out the analysis. These categories include the classification into the Islamic banks and the conventional banks. The Islamic window operations have not been included in the analysis, as the details required for the variable calculations are not consistently available. Moreover, this bifurcation in the sample is also a unique aspect of this research, as the prior literature primarily focuses on the determinants of the intellectual capital in the banking sector. However though, there is no direct study regarding the differences in the resource intangibility in the Islamic banks and the conventional banks, and their subsequent impact on the intellectual capital and competitive advantage. The time frame for the analysis is taken from the year FY2008-FY2018. Also, the findings of this study lead to striking implications for both the Islamic banking theory and the managerial practices in the banking sector of Pakistan. The resource intangibility is to be managed very differently across both categories. Where the intangible assets represent a significant contribution to both the intellectual capital and the competitive advantage for Islamic banks, they also represent a negligible impact on the intellectual capital, and the competitive advantage for conventional banks. This holds true for the conventional performance measures that are taken for the banking sector as well, as shown in the robustness analysis. Future studies may focus on additional countries to determine the consistency of these patterns. Furthermore, the additional explorations are possible, especially when considering this phenomenon. These include the impact of the bank size, the market position, and the country of location, etc.