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The Profitabilityof the Banking Sector of Pakistan


  • Rehana Siddiqui

    (Pakistan Institute of Development Economics, Islamabad)

  • Rizwana Siddiqui

    (Pakistan Institute of Development Economics, Islamabad)


The main objective of the study is to examine the determinants of the profitability of the banking sector of Pakistan. The level of bank advances and deposits, the liquidity ratio, and the 'spread' between rate of return on advances and rate of return on deposits, have been selected as the main indicators of the profitability of the banking system. The analysis shows that level of economic activity is the m,~iordeterminant of the profitability of the banking sector. The study finds, somewhat unexpectedly, that the rate of return on advances and the rate of return on depo~its may not be very effective tools to control the financial sector

Suggested Citation

  • Rehana Siddiqui & Rizwana Siddiqui, 1998. "The Profitabilityof the Banking Sector of Pakistan," PIDE-Working Papers 1998:162, Pakistan Institute of Development Economics.
  • Handle: RePEc:pid:wpaper:1998:162

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