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The impact of sectoral and macroeconomic variables on company profitability in the energy sector. Analysis using neural networks

Author

Listed:
  • Dawid Szutowski

    (Poznań University of Economics and Business, Department of Controlling, Financial Analysis and Valuation;)

Abstract
The aim of this empirical study was to determine the relationship between the main sectoral and macroeconomic variables and the profitability of companies in the energy sector. It analysed jointly the macroeconomic variables including: the unemployment rate, changes in gross domestic product, the Consumer Price Index, the Producer Price Index, the sector-level variables covering the share of energy from renewable sources and investment in the sector, and the company-level profitability indicators. The study sample included 300 companies operating in Poland in 2003–2021. For the purpose of data analysis, it employed a neural network. Specifically, a multi-layer perceptron (MLP) with the hyperbolic tangent as the activation function was used. The findings suggest that the changes in both sectoral and macroeconomic variables may have an important effect on the profitability of companies operating in the energy sector. The study proposes several novelties, including the employment of neural networks and a joint analysis of both sectoral and macroeconomic independent variables.

Suggested Citation

  • Dawid Szutowski, 2024. "The impact of sectoral and macroeconomic variables on company profitability in the energy sector. Analysis using neural networks," Bank i Kredyt, Narodowy Bank Polski, vol. 55(3), pages 357-380.
    • Handle: RePEc:nbp:nbpbik:v:55:y:2024:i:3:p:357-380
    as

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    File URL: https://bankikredyt.nbp.pl/content/2024/03/bik_03_2024_06.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    profitability; macroeconomic indicators; sectoral indicators; neural network; energy sector;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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