Do Oil Price Shocks Give Impact on Financial Performance of Manufacturing Sectors in Indonesia?

Abstract

The panel vector auto regression model is estimated using three main variables related to with profitability, financial liquidity, and financial leverage for 94 manufacturing companies from 2000 to 2017 in Indonesia. The aim is to examine the impact of oil price shocks on the ROA (profitability), CR (financial liquidity), and DER (financial leverage). The impulse reaction function of samples reveals some remarkable results. First, the response of ROA, DER, and CR appears to be consistent in many ways. Second, either Brent oil or WTI oil gives the same result for these variables. Third, financial liquidity for Indonesia manufacturing companies is not affected by the oil prices. The results obtained are robust following the GMM model in the estimation of the panel VAR.

Corporate Financial Performance and the Intervening Role of Energy Operating Costs: The Case of Jordanian Electricity Sector

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Crude Oil Price, Interest Rate and Unemployment Nexus in Nigeria: An Application of Toda and Yamamoto Long-Run Causality Procedure

“…The data for the sample period was analyzed using FMOLS and the outcome indicated that crude oil price exerts a positive effect on real non-crude oil price economic growth while the rate of exchange exerts a negative impact on non-crude oil price economic growth. Wiryono, Sudrajad, Prasetio, and Setiawati (2020) investigated the influence of fluctuations in crude oil price on profitability, financial liquidity and financial leverage using the sample of ninety-four manufacturing companies for the 2000-2017 periods. The outcomes indicated consistency in the case of profitability, financial liquidity and financial leverage.…”