Profitability of the Banking Sector of Pakistan: Panel Evidence from Bank-Specific, Industry-Specific and Macroeconomic Determinants
AbstractThis study investigates determinants of banks’ profitability in Pakistan by using the panel data of 18 banks from the period of 2001 to 2010. Pedroni panel cointegration results confirm that there exists valid long run relationship between considered variables. Results of random effects model suggest negative and significant effect of bank size, credit risk, liquidity, taxation, and nontraditional activity with profitability. Conversely, positive and significant effects of capitalization, banking sector development and inflation have been found with profitability. However, the stock market development has negative but insignificant relationship with profitability. Sensitivity analyses confirm that the results are robust.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 48485.
Date of creation: 05 Jul 2013
Date of revision:
Profitability; Banks; Panel Data; Credit Risk;
Find related papers by JEL classification:
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- L8 - Industrial Organization - - Industry Studies: Services
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-28 (All new papers)
- NEP-BAN-2013-07-28 (Banking)
- NEP-MAC-2013-07-28 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fadzlan Sufian & Muzafar Habibullah, 2009. "Bank specific and macroeconomic determinants of bank profitability: Empirical evidence from the China banking sector," Frontiers of Economics in China, Springer, Springer, vol. 4(2), pages 274-291, June.
- Alicia Garcia-Herrero & Daniel Santabarbara & Sergio Gavila, 2009.
"What explains the low profitability of Chinese banks?,"
Working Papers, BBVA Bank, Economic Research Department
0909, BBVA Bank, Economic Research Department.
- García-Herrero, Alicia & Gavilá, Sergio & Santabárbara, Daniel, 2009. "What explains the low profitability of Chinese banks?," Journal of Banking & Finance, Elsevier, Elsevier, vol. 33(11), pages 2080-2092, November.
- Alicia García-Herrero & Sergio Gavilá & Daniel Santabárbara, 2009. "What explains the low profitability of Chinese banks?," Banco de Espaï¿½a Working Papers 0910, Banco de Espa�a.
- Arief Putranto & Aldrin Herwany & Erman Sumirat, 2012. "The Determinants Of Commercial Bank Profitability In Indonesia," Working Papers in Business, Management and Finance, Department of Management and Business, Padjadjaran University 201202, Department of Management and Business, Padjadjaran University, revised Dec 2012.
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