Navigating Financial Challenges: A Model for the Financial Sustainability of Public Sector Universities in Pakistan

Abstract

Public Sector Universities (PSUs) in Pakistan are facing serious challenges 
in achieving financial sustainability despite their critical role in advancing 
socio-economic development. These institutions rely heavily on government funding but are facing increasing financial constraints that limit their ability to maintain academic quality and research standards. This study attempts to investigate the determinants of financial sustainability in PSUs, and the  strategic change that mediates these determinants, with respect to strategic planning, financial management, structural reforms, and innovations. Data for this study were collected from 365 respondents who were teaching and non-teaching staff members of grade 17 and above from 33 public sector universities in Khyber Pakhtunkhwa, Pakistan. The relationships between the dependent and independent variables were tested by using regression analysis. Results showed that strategic planning, financial management, structural reforms, and innovations significantly impact the financial sustainability of PSUs, with strategic change acting as a crucial mediator in these relationships. This research contributes to the limited literature on financial sustainability in higher education, especially in developing countries. The findings are insightful for policymakers and university administrators of Pakistan and other similar regions, providing workable strategies in enhancing the financial health and long-term viability of public sector universities.