Impact of macroeconomic variables on the construction sector

Abstract

The construction industry is the main accelerator of the country’s economy. Therefore, research studies on the impact of economic influences on the construction industry are vast. However, finding the main macroeconomic factors is limited in the Albanian industry (Puci et al., 2022). To fill the research gap, this paper aims to identify the macroeconomic variables that influence the sector of construction through an empirical investigation. To achieve this objective, an empirical study is done where the data set is defined as panel data. The model includes four independent variables: gross domestic product (GDP) growth, inflation rate, exchange rate, and interest rate; whereas the dependent variable is represented by return on assets (ROA) for 36 audited companies from 2010–2020, making a total of 396 observations. Multiple regression through EVIEWS 10 software is used to identify any potential relationship among them. The results of this paper indicate that all the variables were statistically significant; GDP growth and interest rate were proved to positively impact the profitability of companies operating in the construction sector; whereas the two other variables such as inflation rate and exchange rate negatively impact ROA for the period examined. Lastly, the paper emphasizes the role of the government as an investment-led industry; for the nation’s prosperity construction sector is ultimate. Considering the role of construction in the development of Albania, it is necessary for the government to pay adequate attention to this sector.

EXAMINING MACROECONOMIC FACTORS & CAPITAL STRUCTURE CHOICES IN PAKISTAN'S MANUFACTURING INDUSTRY: AN EMPIRICAL ANALYSIS

“…The results indicate that GDP growth rate, corporate tax, and interest rate have negative link with financial leverage (Januário & Cruz, 2023;Karim et al, 2023;Neykov et al, 2022;Puci et al, 2023), while exchange rates, stock market development, and public debt have positive association with financial leverage in the manufacturing sector (Rasool et al, 2021;Shaikh et al, 2022;Uddin et al, 2022). The findings of current research are in line with findings of previous researches (Puci et al, 2023;Venâncio & Jorge, 2022;Yadav, 2022).…”

“…The present research article aims to examine correlation between aforementioned factors and financial leverage within the manufacturing industry (Jamil, Rasheed, Maqbool & Mukhtar, 2023). Previous research has demonstrated that there exists inverse correlation between financial leverage and many economic indicators, including GDP growth rate, corporate tax, and interest rate (Puci, Demi & Kadiu, 2023). The present findings suggest that an escalation in these variables is associated with a decrease in employment of debt financing within capital configuration of firms.…”

Analysing the Dynamics of Supply Construction Gross Domestic Products in Malaysia

“…By incorporating a broad array of macroeconomic indicators, the study provides a holistic perspective on the performance of the supply construction sector (Farhah Natasha Binti Hashim, 2017;Kan, 2017;Abdullah, 2022;Correia and Ribeiro, 2022; Mohd Damit, M.R. Puci, Demi and Kadiu, 2023). This approach aligns with the study's objective to understand the intricate dynamics and influence of these economic factors on the sector.…”

“…This study strives to bridge this gap by adopting a more comprehensive approach. It incorporates a broader array of crucial macroeconomic indicators, which include exchange rates, base lending rates, and Inflation (Farhah Natasha Binti Hashim, 2017;Musarat, Alaloul and Liew, 2021;Correia and Ribeiro, 2022;Outram, 2022;Puci, Demi and Kadiu, 2023). By taking this inclusive stance, the study endeavours to provide a more holistic perspective on the performance of the supply construction sector.…”

An assessment of bank profitability: Evidence from Albania

“…Governments and financial institutions actively monitor macroeconomic parameters that determine economic performance, including economic output, inflation, unemployment, national income, gross domestic product (GDP), investment, and savings (Cooper & John, 2009). When looking for strategies to achieve economic policy objectives and foster economic stability, economists frequently consider macroeconomic factors (Puci, Demi, & Kadiu, 2023). While doing so, they are generally able to anticipate future gross domestic product growth trends, inflation rates, and other crucial macroeconomic variables.…”