IMPACT OF MACROECONOMIC UNCERTAINTY ON FIRM PROFITABILITY: A CASE OF BIST NONMETALLIC MINERAL PRODUCTS SECTO

Year 2017, Volume: 6 Issue: 4, 318 - 327, 30.12.2017

Yilmaz Bayar , Isil Erem Ceylan

https://doi.org/10.17261/Pressacademia.2017.764

Abstract

Purpose- The aim of this study is to analyze
the impact of macroeconomic uncertainty on Return on Assets (ROA) and Return on
Operating Profits (ROAF) by employing panel data analysis within the sample of
Borsa Istanbul Non-Metallic Mineral Products sector for the period of
2003:Q1-2016:Q4.

Methodology- Firstly; volatility levels of
exchange rate, interest rate, inflation rate and growth rate were determined by
Generalized Autoregressive Conditional Heteroscedasticity (GARCH) modelling.
Then, the relationship between uncertainty and profitability were examined by
panel data analysis.  

Findings- Our findings revealed that growth
volatility, exchange rate volatility, and interest volatility had a negative
effect on both return on assets (ROA) and operating profit (ROAF).  

Conclusion- Macroeconomic uncertainty has
potential to affect the firm profitability through firm decision-making. The
findings of this were consistent with relevant theoretical and empirical
literature. In this regard, establishing and sustaining a stable macroeconomic
environment is of great importance for firm profitability and in turn achieving
a sustainable growth and lower unemployment rates.

Keywords

Macroeconomic uncertainty, firm profitability, non-metallic mineral products sector, Turkey, panel data analysis

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