Resilience of the Cement Industry in Pakistan: A Comparison of the 2008 Financial Crisis and COVID-19

Abstract

This study investigates the resilience of Pakistan’s cement industry to major external shocks by comparing the 2008 Global Financial Crisis (GFC) and the COVID-19 pandemic. Despite the sector’s importance to infrastructure and economic growth, limited evidence exists on how firm-specific financial attributes shape resilience differently across crisis types. Drawing on the Resource-Based View and dynamic capabilities theories, we examine seven financial characteristics firm size, leverage, retained earnings, dividend payout, capital intensity, cash holdings, and historical return on assets and their effects on operational performance, measured by Return on Assets (ROA) and asset turnover (an efficiency indicator of sales generated per unit of assets). Using a balanced panel of 18 listed cement firms on the Pakistan Stock Exchange over 2007–2022, with crisis windows focused on 2006–2009 and 2018–2021, we employ fixed-effects regressions with Newey-West standard errors. Four models test isolated and pooled crisis effects via a COVID-19 dummy and interaction terms. Results show both crises impaired performance, but COVID-19 caused more severe operational disruptions due to lockdowns and supply-chain halts. Larger and more leveraged firms displayed greater resilience during COVID-19, while firm size negatively affected profitability in the 2008 GFC; liquidity preservation through reduced dividends proved critical in the pandemic. These findings highlight crisis-specific roles of firm resources. Managers should prioritize liquidity buffers for health-related shocks and market confidence for financial downturns, while policymakers can enhance sustainability in capital-intensive sectors through targeted support in emerging economies.