Prague Economic Papers 2023, 32(3):225-245 | DOI: 10.18267/j.pep.827
Analysing Impact of Economic Crises on Sector Profits with a New Approach
- a Ordu University, Department of Management and Organizaton, Ünye, Ordu, Turkey
- b Hacettepe University, Department of Economics, Ankara, Turkey
The manufacturing sector has been regarded as a key factor in the history of economic devel-opment and growth. However, economic fluctuations affect manufacturing seriously. This study examines the impact of the 2008 global economic crisis on Turkish manufacturing sector profit-ability. This paper uses micro-econometric difference in differences methods in conjunction with the macroeconomic forecasting method to investigate how profit levels in the Turkish manufacturing industry are affected by the crisis. The results indicate that the profit levels changed significantly after the crisis with a one-year lag and actual profits exceeded the estimated profits in the later years. Economic impacts of crises have long been investigated; however, this paper differs from the literature in using a new analytical framework for the issue. The suggested method can be expanded to other areas, which can spark new future studies.
Keywords: forecasting, difference in differences, 2008 economic crisis, manufacturing
JEL classification: C21, C53, G01, L60
Received: July 25, 2022; Revised: January 9, 2023; Accepted: February 10, 2023; Published: June 28, 2023 Show citation
References
- Afonso, A., Blanco-Arana, M. C. (2022). Financial and Economic Development in the Context of the Global 2008-09 Financial Crisis. International Economics, 169, 30-42. https://doi.org/10.1016/j.inteco.2021.11.006
Go to original source...
- Alarussi, A. S., Alhaderi, S. M. (2018). Factors Affecting Profitability in Malaysia. Journal of Economic Studies, 45(3), 442-458. https://doi.org/10.1108/jes-05-2017-0124
Go to original source...
- Arocena, P., Orcos, R., Zouaghi, F. (2021). The Impact of ISO 14001 on Firm Environmental and Economic Performance: The moderating Role of Size and Environmental Awareness. Business Strategy and the Environment, 30(2), 955-967. https://doi.org/10.1002/bse.2663
Go to original source...
- Baily, M. N., Bosworth, B. P. (2014). US Manufacturing: Understanding its Past and its Potential Future. Journal of Economic Perspectives. 28(1), 3-26, https://doi.org/10.1257/jep.28.1.3
Go to original source...
- Baltagi, B. H. (2008). Forecasting with Panel Data. Journal of Forecasting, 27(2), 153-173. https://doi.org/10.1002/for.1047
Go to original source...
- Bamberger, B., Homburg, C., Wielgos, D. M. (2021). Wage Inequality: Its Impact on Customer Satisfaction and Firm Performance. Journal of Marketing, 85(6), 24-43. https://doi.org/10.1177/00222429211026655
Go to original source...
- Bedirhanoglu, P. (2022). Economic Management Under the Presidential System of Government in Turkey: Beyond the Depoliticization versus Repoliticisation Dichotomy. Journal of Balkan and Near Eastern Studies, 24(1), 97-113. https://doi.org/10.1080/19448953.2021.1992183
Go to original source...
- Behun, M., Gavurova, B., Tkacova, A., Kotaskova, A. (2018). The impact of the Manufacturing Industry on the Economic Cycle of European Union Countries. Journal of Competitiveness, 10(1), 23-39. https://doi.org/10.7441/joc.2018.01.02
Go to original source...
- Bento, J. A., Duarte, A. P. (2020). Brexit: An Exploratory Analysis of the Macroeconomic Effects on the British Economy. Scientific Annals of Economics and Business, 67(SI), 69-85. https://doi.org/10.47743/saeb-2020-0027
Go to original source...
- Chalikias, J. (2017). The Manufacturing Sector of Greece Before and During the Financial Crisis. International Journal of Economics and Business Administration, 5(1), 3-17. https://doi.org/10.35808/ijeba/116
Go to original source...
- Chatzis, S. P., Siakoulis, V., Petropoulos, A., Stavroulakis, E., Vlachogiannakis, N. (2018). Forecasting Stock Market Crisis Events Using Deep and Statistical Machine Learning Techniques. Expert systems with applications, 112, 353-371. https://doi.org/10.1016/j.eswa.2018.06.032
Go to original source...
- Chen, W. D., Chen, Y., Huang, S. C. (2021). Liquidity Risk and Bank Performance During Financial Crises. Journal of Financial Stability, 56, 100906. https://doi.org/10.1016/j.jfs.2021.100906
Go to original source...
- Choi, Y., Kim, H. J., Lee, Y. (2022). Economic Consequences Of The COVID-19 Pandemic: Will It Be A Barrier To Achieving Sustainability? Sustainability, 14(3), 1629. https://doi.org/10.3390/su14031629
Go to original source...
- Claessens, S., Dell'Ariccia, G., Igan, D., Laeven, L. (2010). Cross-Country Experiences and Policy Implications from the Global Financial Crisis. Economic Policy, 25(62), 267-293. https://doi.org/10.1002/9781444390261.ch2Columbia University Mailman School of Public Health. [online] Available at: https://www.publichealth.columbia.edu/research/population-health-methods/difference-difference-estimation> [Accessed on January 2021].
Go to original source...
- Das, K., Behera, R. L., Paital, B. (2022). Socio-economic Impact of COVID-19. In COVID-19 in the Environment Elsevier. 153-190. https://doi.org/10.1016/b978-0-323-90272-4.00014-2
Go to original source...
- Dincer, N. N., Eichengreen, B., Tekin-Koru, A. (2022). Manufacturing and Service-Sector Productivity in Turkey: A Perspective from Firm-Level Data. The World Economy, 1-26. https://doi.org/10.1111/twec.13266
Go to original source...
- Dumontaux, N., Pop, A. (2013). Understanding The Market Reaction to Shockwaves: Evidence from The Failure of Lehman Brothers. Journal of Financial Stability, 9(3), 269-286. https://doi.org/10.1016/j.jfs.2013.04.001
Go to original source...
- Eichengreen, B., Gupta, P. (2009). The Two Waves of Service Sector Growth: NBER Working Paper. No. 14968.
Go to original source...
- Foroni, C., Marcellino, M., Stevanovic, D. (2022). Forecasting The Covid-19 Recession and Recovery: Lessons from The Financial Crisis. International Journal of Forecasting, 38, 596-612. https://doi.org/10.1016/j.ijforecast.2020.12.005
Go to original source...
- Gennard, J. (2009). The Financial Crisis and Employee Relations. Employee Relations, 31(5), 451-454. https://doi.org/10.1108/01425450910979211
Go to original source...
- Gergely, S., Obrycki, A. (2022). Currency Crises and Humanitarian Funds: Welfare and Monetary Dynamics in Turkey. Türk Sosyal Bilimler Araştirmalari Dergisi, 7(1), 77-88.
- Gujarati, D. N. (2003). Basic Econometrics 4th edition. McGraw Hill: United states.
- Haraguchi, N., Cheng, C. F. C., Smeets, E. (2017). The Importance Of Manufacturing In Economic Development: Has This Changed? World Development, 93, 293-315. https://doi.org/10.1016/j.worlddev.2016.12.013
Go to original source...
- Hu, L. (2012). Prediction and Analysis for Chinese Machinery Manufacturing System Based on the ARMA. In Applied Mechanics and Materials. Trans Tech Publications, 121, 3396-3400. https://doi.org/10.4028/www.scientific.net/amm.121-126.3396
Go to original source...
- IMF (1998). World Economic Outlook, May 1998. Washington, DC: International Monetary Fund.
- Jermias, J., Yigit, F. (2019). Factors Affecting Leverage During a Financial Crisis: Evidence from Turkey. Borsa Istanbul Review, 19(2), 171-185. https://doi.org/10.1016/j.bir.2018.07.002
Go to original source...
- Junttila, J., Vataja, J. (2018). Economic Policy Uncertainty Effects for Forecasting Future Real Economic Activity. Economic Systems, 42(4), 569-583. https://doi.org/10.1016/j.ecosys.2018.03.002
Go to original source...
- Karaca, C. (2014). Uygulanan Para ve Maliye Politikalari Açisindan Geçmiş Krizler ve 2008 Küresel Ekonomik Krizinin Karşilaştirmali Analizi. Çankiri Karatekin Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 5(1), 263-286.
- Kibritcioglu, A. (2002). Causes of Inflation in Turkey: A Literature Survey with Special Reference to Theories of Inflation. Inflation and disinflation in Turkey. 43-76. https://doi.org/10.2139/ssrn.277873
Go to original source...
- Kindleberger, C. P. (2008). Cinnet, Panik, Çöküş Mali Krizler Tarihi. (H. Tunali. Trans.) İstanbul: İstanbul Bilgi Üniversitesi Yayinlari.
- Krugman, P. (1999). Balance Sheets, The Transfer Problem, And Financial Crises, in International Finance and Financial Crises. Springer. Dordrecht. 31-55. https://doi.org/10.1007/978-94-011-4004-1_2
Go to original source...
- Liu, J., Zhang, Z., Yan, L., Wen, F. (2021). Forecasting The Volatility of EUA Futures with Economic Policy Uncertainty Using The GARCH-MIDAS Model. Financial Innovation, 7(1), 1-19. https://doi.org/10.1186/s40854-021-00292-8
Go to original source...
- Machaj, M. (2016). Can The Taylor Rule Be a Good Guidance for Policy? The Case of 2001-2008 Real Estate Bubble. Prague Economic Papers, 25(4), 381-395. https://doi.org/10.18267/j.pep.573
Go to original source...
- Martinez, M. G., Zouaghi, F., Marco, T. G., Robinson, C. (2019). What drives business failure? Exploring the role of internal and external knowledge capabilities during the global financial crisis. Journal of Business Research, 98, 441-449. https://doi.org/10.1016/j.jbusres.2018.07.032
Go to original source...
- Milanovic, B. (2022). After The Financial Crisis: The Evolution of the Global Income Distribution Between 2008 And 2013. Review of Income and Wealth, 68(1), 43-73. https://doi.org/10.1111/roiw.12516
Go to original source...
- Mishkin, F. S. (1992). Anatomy of a Financial Crisis. Journal of Evolutionary Economics, 2(2), 115-130.
Go to original source...
- OECD. (2009). OECD Economic Outlook Interim Report. OECD publishing. March 2009.
Go to original source...
- Park, C. Y., Shin, K. (2020). Contagion Through National and Regional Exposures to Foreign Banks During the Global Financial Crisis. Journal of Financial Stability, 46, 100721. https://doi.org/10.1016/j.jfs.2019.100721
Go to original source...
- Parolin, Z., Wimer, C. (2020). Forecasting Estimates of Poverty During the COVID-19 Crisis. Poverty and Social Policy Brief, 4(8).
- Paul, S. C., Rahman, M. A. (2021). Current Assets, Current Liabilities and Profitability: A Cross Industry Analysis. Journal of Asian Business Strategy, 11(1), 55-68. https://doi.org/10.18488/journal.1006.2021.111.55.68
Go to original source...
- Polat, M. A. (2019). Türkiye Kaynakli Finansal Krizlerin Anatomisi. Avrasya Sosyal ve Ekonomi Araştirmalari Dergisi, 6(1), 329-345.
- Radelet, S., Sachs, J. (1998). The Onset of the East Asian Financial Crisis. National Bureau of Economic Research. Working Paper w6680. https://doi.org/10.3386/w6680
Go to original source...
- Rodrik, D. (2016). Premature Deindustrialization. Journal of Economic Growth, 21(1), 1-33. https://doi.org/10.1007/s10887-015-9122-3
Go to original source...
- Schwartz, A. J. (1987). Real and Pseudo-Financial Crises, in Money in Historical Perspective. University of Chicago Press. 271-288.
- Sensini, L., Vazquez, M. (2021). Effects of Working Capital Management on SME Profitability: Evidence from an emergent economy. International Journal of Business and Management, 16(4), 85-95. https://doi.org/10.5539/ijbm.v16n4p85
Go to original source...
- Silva, T. C., Muniz, F. J., Tabak, B. M. (2022). Indirect and Direct Effects of the Subprime Crisis On the Real Sector: Labor Market Migration. Empirical Economics, 1-32. https://doi.org/10.1007/s00181-021-02051-1
Go to original source...
- Soni, R. (2018). Does Firms Have Impact of Currency Appreciation and Currency Volatility on Market Shares? - Study of Selected Financial and Non-Financial Firms of India. Theoretical Economics Letters, 8(5), 1004-1017. https://doi.org/10.4236/tel.2018.85069
Go to original source...
- Suanpang, P., Jamjuntr, P. (2021). A Comparative Study of Deep Learning Methods for Time-Series Forecasting Tourism Business Recovery from the COVID-19 Pandemic Crisis. Journal of Management Information and Decision Sciences, 24, 1-10.
- Taylor, J. B. (2009). The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong. National Bureau of Economic Research. Working paper w14631. https://doi.org/10.3386/w14631
Go to original source...
- Tyagi, S., Mahajan, V. (2022). What Determines Profitability in the Indian Automobile Industry? The Indian Economic Journal, 70(1), 71-87. https://doi.org/10.1177/00194662211063574
Go to original source...
- United Nations. (2022). World Economic Situation and Prospects 2022. UN DESA Report, New York.
- Vena-Oya, J., Castañeda-García, J. A., Rodríguez-Molina, M. Á. (2022). Forecasting A Post-COVID-19 Economic Crisis Using Fuzzy Cognitive Maps: A Spanish Tourism-Sector Perspective. Current Issues in Tourism, 25(13), 2048-2062. https://doi.org/10.1080/13683500.2021.1944995
Go to original source...
- Zhang, H., Song, H., Wen, L., Liu, C. (2021). Forecasting Tourism Recovery Amid COVID-19. Annals of Tourism Research, 87, 103149. https://doi.org/10.1016/j.annals.2021.103149
Go to original source...
This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.