All Theses and Dissertations


Master of Science in Economics

Faculty / School

School of Economics and Social Sciences (SESS)


Department of Economics

Date of Award

Spring 2021


Dr. Heman Das Lohano

Committee Member 1

Dr. Heman Das Lohano, Institute of Business Administration, Karachi

Project Type


Access Type

Restricted Access


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Crude oil-the main source of energy, is an important commodity in the world as changes in its price have a direct and indirect effect on important sectors of economies. On the one side, it is an input for many firms in the production of goods and services, and on the other side, it is an important output for other firms. For instance, industrial sector uses petroleum products as input to produce products such as plastic, solvent and many intermediate and end-user goods, while for exploring companies, it is an output. This paper examines how disaggregation of oil-consuming and oil-producing firms is essential to understand the impact of international oil prices on the financial performance of firms. The study is conducted by using panel data of 171 non-financial firms listed in Pakistan Stock Exchange during 2000 to 2017. Regression model is estimated using the fixed effect least squares estimator. The results show that the earnings of oil-producing firms are not significantly affected by international oil prices. In contrast, oil prices have a significant negative impact on the return on assets (ROA) of oil-consuming firms. Among the sub-sectors of oil-consumers, the profitability of more oil-intensive firms is more vulnerable to oil prices as compared to less oil-intensive firms. A 1 percent rise in price of oil decreases the profitability of more oil- intensive firms by 0.1 percentage points as compared to .04 percentage points for less oil-intensive firms.

JEL Codes: G01; L25; Q43

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