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Empirical Linkages between Branching, Lending, and Competition: A Study of Pakistani Banks

Author

Listed:
  • Jaleel Ahmed

    (Department of Accounting and Finance, Capital University of Science and Technology (CUST), Islamabad 44000, Pakistan)

  • Umar Farooq

    (School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710049, China)

  • Ahmad A. Al-Naimi

    (Department of Finance and Banking Sciences, Faculty of Business, Applied Science Private University, Amman 11931, Jordan)

  • Mosab I. Tabash

    (College of Business, Al Ain University, Al Ain P.O. Box 64141, United Arab Emirates)

  • Krzysztof Drachal

    (Faculty of Economic Sciences, University of Warsaw, ul. Długa 44/50, 00-241 Warszawa, Poland)

Abstract

This study examines the relationship between branching, lending, and competition in Pakistani banks. Due to denationalization, Pakistani banks started to increase their branch networks and change loan and deposit policies. To check the effect of geographic diversification and distance on the performance of banks, the market power of loans and deposits, and the effect of large and medium banks on the performance of small banks, a sample of commercial banks is selected. The study finds that geographic diversification and distance between bank branches and headquarters do not affect the performance of the banks, but geographic diversification of banks in different areas affects the market power of loans and deposits. The results show that medium and large banks do not affect the performance of the small banks because small banks are better performing in the local market. Medium and large banks are affected by the market power of the loans and deposits of small banks. The study recommends an important policy regarding branch management and its effect on bank performance.

Suggested Citation

  • Jaleel Ahmed & Umar Farooq & Ahmad A. Al-Naimi & Mosab I. Tabash & Krzysztof Drachal, 2023. "Empirical Linkages between Branching, Lending, and Competition: A Study of Pakistani Banks," Economies, MDPI, vol. 11(5), pages 1-16, May.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:5:p:145-:d:1144143
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    References listed on IDEAS

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