By
Saad Ashraf Qureshi, M. Ishaq Nausherwani & Salman Ahmed Shaikh
Abstract
Banking sector is one of the most dominant financial institutions in
Pakistan. The purpose of this study is to identify the factors affecting the
performance of commercial banks in Pakistan by using a sample consisting of
twenty-four commercial banks on quarterly basis over the period 2009-2017. This
study is focused on both bank-specific and macroeconomic variables using
Generalized Least Square (GLS) method to determine the relationship between
Capital Adequacy, Credit Risk, Finance to Deposit, GDP and Inflation on
profitability variable Net Operating Efficiency (NOE). The results concluded
that Capital Adequacy, Credit Risk and Finance to Deposit had negative
relationship with Profitability whereas Inflation had significant positive
relationship with Profitability for both Conventional and Islamic banks.
However, GDP had insignificant positive effect on profitability for
Conventional banks and significant negative effect on profitability for Islamic
banks. This study is a contribution in literature based on recent profitability
and performance trends of Pakistani banking sector.
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