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The Banking Sector In Pakistan Internal Determinants Of Commercial Banks Profitability
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Book Synopsis The Banking Sector in Pakistan. Internal Determinants of Commercial Banks' Profitability by : Saira Anis
Download or read book The Banking Sector in Pakistan. Internal Determinants of Commercial Banks' Profitability written by Saira Anis and published by GRIN Verlag. This book was released on 2017-09-26 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: Academic Paper from the year 2014 in the subject Economics - Finance, grade: 2.92, , language: English, abstract: This study focuses on internal factors and how they are affecting the profitability of banks in Pakistan. The report seeks answer to the following research problems: Which internal determinants are affecting the commercial banks’ profitability in Pakistan? And: How are these internal determinants affecting the commercial banks' profitability in Pakistan? To analyze the internal determinants affecting the profitability of 14 commercial banks of Pakistan, the study is based on available data over the period of 2007 to 2012 and aims to recognize major determinants of profitability.
Book Synopsis The Profitability of the Banking Sector of Pakistan by : Rehana Siddiqui
Download or read book The Profitability of the Banking Sector of Pakistan written by Rehana Siddiqui and published by . This book was released on 1998 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Determinants of the Pakistan Islamic Banking Industry Profitability by : Farrukh Ijaz
Download or read book The Determinants of the Pakistan Islamic Banking Industry Profitability written by Farrukh Ijaz and published by . This book was released on 2015 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: The financial sector plays an important role in the economic and fiscal development of a country. A well-built and vigorous banking system is a precondition for the sustainable financial growth of a country. Over the past few years, Islamic banking industry of Pakistan has been facing many problems and challenges to maintain the financial stability. To overcome this issue, it is vital to classify the factors that mostly impact the overall profitability of Islamic banks in Pakistan. Two models were used alternatively for ROA and ROE as dependent variable. A set of internal factors were considered as independent variables including: bank's size, gearing ratio, operational efficiency, asset management and capital adequacy ratio for the time period 2006-2013. The results indicate that different measures of profitability depend upon different bank specific factors. The study found that profitability of Islamic banks depends on the leverage ratio, operating efficiency, asset management and bank size. Further research can be extended to explore the above findings and to include some other internal factors such as general bank charges, doubtful loans or reserves ratios, and external factor such as GDP, exchange rate and CPI as well.
Book Synopsis Determinants of Commercial Bank Interest Margins and Profitability by : Asl? Demirgüç-Kunt
Download or read book Determinants of Commercial Bank Interest Margins and Profitability written by Asl? Demirgüç-Kunt and published by World Bank Publications. This book was released on 1998 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: March 1998 Differences in interest margins reflect differences in bank characteristics, macroeconomic conditions, existing financial structure and taxation, regulation, and other institutional factors. Using bank data for 80 countries for 1988-95, Demirgüç-Kunt and Huizinga show that differences in interest margins and bank profitability reflect various determinants: * Bank characteristics. * Macroeconomic conditions. * Explicit and implicit bank taxes. * Regulation of deposit insurance. * General financial structure. * Several underlying legal and institutional indicators. Controlling for differences in bank activity, leverage, and the macroeconomic environment, they find (among other things) that: * Banks in countries with a more competitive banking sector-where banking assets constitute a larger share of GDP-have smaller margins and are less profitable. The bank concentration ratio also affects bank profitability; larger banks tend to have higher margins. * Well-capitalized banks have higher net interest margins and are more profitable. This is consistent with the fact that banks with higher capital ratios have a lower cost of funding because of lower prospective bankruptcy costs. * Differences in a bank's activity mix affect spread and profitability. Banks with relatively high noninterest-earning assets are less profitable. Also, banks that rely largely on deposits for their funding are less profitable, as deposits require more branching and other expenses. Similarly, variations in overhead and other operating costs are reflected in variations in bank interest margins, as banks pass their operating costs (including the corporate tax burden) on to their depositors and lenders. * In developing countries foreign banks have greater margins and profits than domestic banks. In industrial countries, the opposite is true. * Macroeconomic factors also explain variation in interest margins. Inflation is associated with higher realized interest margins and greater profitability. Inflation brings higher costs-more transactions and generally more extensive branch networks-and also more income from bank float. Bank income increases more with inflation than bank costs do. * There is evidence that the corporate tax burden is fully passed on to bank customers in poor and rich countries alike. * Legal and institutional differences matter. Indicators of better contract enforcement, efficiency in the legal system, and lack of corruption are associated with lower realized interest margins and lower profitability. This paper-a product of the Development Research Group-is part of a larger effort in the group to study bank efficiency.
Book Synopsis Bank Size and Systemic Risk by : Mr.Luc Laeven
Download or read book Bank Size and Systemic Risk written by Mr.Luc Laeven and published by International Monetary Fund. This book was released on 2014-05-08 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: The proposed SDN documents the evolution of bank size and activities over the past 20 years. It discusses whether this evolution can be explained by economies of scale or “too big to fail” subsidies. The paper then presents evidence on the extent to which bank size and market-based activities contribute to systemic risk. The paper concludes with policy messages in the area of capital regulation and activity restrictions to reduce the systemic risk posed by large banks. The analysis of the paper complements earlier Fund work, including SDN 13/04 and the recent GFSR chapter on “too big to fail” subsidies, and its policy message is in line with this earlier work.
Book Synopsis The Profitability of Banking Sector in Pakistan by : Imran Naseem
Download or read book The Profitability of Banking Sector in Pakistan written by Imran Naseem and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Banking sector plays an important role in financial stability of an economy. This study investigates the determinants of profitability of banking sector in Pakistan. For this purpose the data of all Pakistani banks were collected for the period of 2006-2010. We examined the relationship between macroeconomics and bank specific characteristics. To investigate the impact of loans, assets, deposits, equity, economic growth, inflation and market capitalization on profitability measures ROE (return on equity) ROA (return on assets) ROCE (return on capital employed)i and NIM (net interest margin) by using POLS (Pooled ordinary least square). The study found both internal and external factors have strong impact on profitability of overall banking sector. We tested their study on our data and sample of 40 Pakistani banks which shows overall economic condition of banking sector in Pakistan.
Book Synopsis Determinants of Islamic Banking Industry's Profitability In Pakistan for the Period 2004-2012 by : Muhammad Abubakar Siddique
Download or read book Determinants of Islamic Banking Industry's Profitability In Pakistan for the Period 2004-2012 written by Muhammad Abubakar Siddique and published by . This book was released on 2016 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: To explore how Islamic banking could be promoted in Pakistan, one of the crucial factors is exploring the factors that determine the profitability of Islamic Banking Industry (IBI). The studies on the determinants of Islamic banking growth focus on a number of such internal and external determinants. Because of not taking into account both internal and external factors simultaneously, most of the studies are subject to some biases. This study takes into account both internal and external determinants, empirically investigates the core determinants of growth of Islamic banking in Pakistan and evaluates the relative importance of internal and external factors in IBI's growth during the period 2004-2012. Quarterly unbalanced panel data have been used for nine Islamic banks: Five full-fledged Islamic banks and four standalone Islamic branches of conventional banks. Encompassing Approach and General to Specific (GTS) methodology have been used to select the most appropriate model. The study found that internal factors were relatively more important than external factors, because according to GTS approach, comparatively some external variables were found highly insignificant and were dropped. Internal factors like total assets, operating expenses over total assets, number of branches, capital ratio (total equity to total asset) and liquidity, and external factors like inflation and interest rate were significantly related to return on asset in both long run and short run while only inflation did not show any significant immediate impact on ROA in the short run. These findings propose that banks with high capital ratio are relatively more profitable. Efficient management of bank operations can enhance bank profitability. Islamic banks will have to improve their capability to predict inflation to adjust profit rates accordingly.
Book Synopsis Financial Structure and Bank Profitability by : Asl? Demirgüç-Kunt
Download or read book Financial Structure and Bank Profitability written by Asl? Demirgüç-Kunt and published by World Bank Publications. This book was released on 2000 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Countries differ in the extent to which their financial systems are bank-based or market-based. The financial systems of Germany and Japan, for example, are considered bank-based because banks play a leading role in mobilizing savings, allocating capital, overseeing investment decisions of corporate managers, and providing risk management vehicles. The systems of the United States, and the United Kingdom are considered more market-based. Using bank-level data for a large number of industrial and developing countries, the authors present evidence about the impact of financial development, and structure on bank performance. They measure the relative importance of bank or market finance by the relative size of stock aggregates, by relative trading or transaction volumes, and by indicators of relative efficiency. They show that in developing countries, both banks and stock markets are less developed, but financial systems tend to be more bank-based. The richer the country, the more active are all financial intermediaries. The greater the development of a country's banks, the tougher is the competition, the greater is the efficiency, and the lower are the bank margins, and profits. The more under-developed the stock market, the greater are the bank profits. But financial structure per se does not have a significant, independent influence on bank margins, and profits.
Book Synopsis Determinants of Bank Performance by : Asif Ali
Download or read book Determinants of Bank Performance written by Asif Ali and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Banking sector plays the most important role in the economic growth of country. It is generally agreed that a sprout and well-functioning banking sector is a prerequisite for sustainable economic growth. Banks in Pakistan have been undergoing major challenges in the dynamic environment over the past few years. The aim of this study is to examine the effect of bank-specific, industry-specific and macroeconomic determinants of bank performance. The study employs annual data for 13 Commercial Banks of Pakistan for the period 2005 to 2013. Pooled regression analysis is used to test hypothesis. Results of pooled regression revealed that all variables except bank size have a negative and significant impact on bank performance, whereas bank size has positive and significant impact on bank performance. Overall, it can be concluded that all the bank-specific variables affect profitability strongly. Macro-economic variables influenced the profitability much but negatively. Moreover, the industry related variables have also significant association with bank performance.
Book Synopsis Determinants of Profitability of Islamic Banking Industry by : Muhammad Mahmood Shah Khan
Download or read book Determinants of Profitability of Islamic Banking Industry written by Muhammad Mahmood Shah Khan and published by . This book was released on 2016 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: The financial sector plays a vital role in the expansion and growth of an economy. The essential factor for the financial growth of a country is a stable banking system. Over the past few years, Islamic banking industry of Pakistan has grown substantially, however, it faces many challenges regarding its financial stability. This study tries to assess factors that affect the profitability of Islamic banking industry over the period of 2007 to 2014. Return on assets (ROA), return on equity (ROE), and earnings per share (EPS) are used as dependent variables. Bank's size, gearing ratio, non-performing loans (NPL) ratio, operational efficiency, asset composition, asset management, capital adequacy ratio, deposit ratio, gross domestic product (GDP), and consumer price index (CPI) are used as independent variables. Findings of the study indicate that measures of Islamic banking profitability are significantly affected by bank-specific factors such as gearing ratio, asset management, deposit ratio, and NPL ratio and external factor such as CPI.
Book Synopsis Islamic Finance Alternatives for Emerging Economies by : M. Ustaoglu
Download or read book Islamic Finance Alternatives for Emerging Economies written by M. Ustaoglu and published by Springer. This book was released on 2014-08-26 with total page 164 pages. Available in PDF, EPUB and Kindle. Book excerpt: Turkey could be considered the most important and leading Islamic country that has implemented the Western economic model successfully mostly because of the modernization efforts since late Ottoman period. As a result of the secularization efforts in the field of economy in early republican era, Muslim people in the country had to deal with non-Islamic practices that contradict with their religious beliefs. Islamic Finance Alternatives for Emerging Economies analyzes the emergence of the Islamic financial institutions in Turkey, by taking into account their history, their operational model, and their legal regulations in the financial field, to discuss the future of Islamic finance. The contributors also consider the ability of Islamic financial institutions and tools to respond to the financial needs of Muslims.
Book Synopsis Determinants of Profitability in Commercial Banks in Albania by : Arjeta Hallunovi
Download or read book Determinants of Profitability in Commercial Banks in Albania written by Arjeta Hallunovi and published by . This book was released on 2018-06-12 with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt: Scientific Study from the year 2018 in the subject Economics - Finance, grade: 12, language: English, abstract: This study examines the determinants of profitability of commercial banks in Albania. These determinants are categorized into two groups, internal factors that are the bank specific factors and external factors that are further divided into macroeconomic factors and industry specific factors. The main objective of the study is to determine the factors affecting the profitability of commercial banks and making some recommendations, that maybe can help the management and policymakers. A panel data with 16 commercial banks in Albania is analyzed for the period 2009-2014. Two indicators are used (dependent variables) for the measurement of profitability, return on assets (ROA) and return on equity (ROE). Banking specific factors that are used in this study include variables such as bank size, asset management, credit risk, liquidity of assets, capital adequacy, operational efficiency and cost of financing. On the other hand is taken into consideration only one industry specific factor, which is the concentration and macroeconomic factors such as GDP, inflation and exchange rate. To meet the main object of the research, the study is based mainly on quantitative research method, which is supplemented by a qualitative method. Quantitative data were obtained mainly from the financial statements of commercial banks, by INSTAT, Bank of Albania, and World Bank, in order to make empirical analysis needed to identify and measure the determinants of bank profitability. In particular, multiple regression analysis was used to measure the impact of the determinants of bank profitability. On the other hand, qualitative data were collected through unstructured interviews conducted with executives of finance in the albanian commercial banks. To realize empirical analysis were used the software SPSS 22 and Eviews 7.
Book Synopsis Nonperforming Loans in Sub-Saharan Africa by : Hippolyte Fofack
Download or read book Nonperforming Loans in Sub-Saharan Africa written by Hippolyte Fofack and published by World Bank Publications. This book was released on 2005 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This paper investigates the leading causes of nonperforming loans during the economic and banking crises that affected a large number of countries in Sub-Saharan Africa in the 1990s. Empirical analysis shows a dramatic increase in these loans and extremely high credit risk, with significant differences between the CFA and non-CFA countries, and substantially higher financial costs for the latter sub-panel of countries. The results also highlight a strong causality between these loans and economic growth, real exchange rate appreciation, the real interest rate, net interest margins, and interbank loans consistent with the causality and econometric analysis, which reveal the significance of macroeconomic and microeconomic factors. The dramatic increase in these loans is largely driven by macroeconomic volatility and reflects the vulnerability of undiversified African economies, which remain heavily exposed to external shocks. Simulated results show that macroeconomic stability and economic growth are associated with a declining level of nonperforming loans; whereas adverse macroeconomic shocks coupled with higher cost of capital and lower interest margins are associated with a rising scope of nonperforming loans. These results are supported by long-term estimates of nonperforming loans derived from pseudo panel-based prediction models. "--World Bank web site.
Book Synopsis Profit Efficiency and Risk Management in the Banking Sector of Pakistan by : Muneer Ahmed
Download or read book Profit Efficiency and Risk Management in the Banking Sector of Pakistan written by Muneer Ahmed and published by . This book was released on 2020 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the relationship among risk management, profit efficiency using capital adequacy ratios as a risk management proxy of banks in Pakistan. In the first part, the efficiency of Banking sectors was evaluated and compared using the Stochastic Frontier Approach. In the second stage, Efficiency scores along with other banks' specific and macroeconomic variables were used as a determinants of Risk management using panel regression analysis. Data was collected from a sample of 25 commercial banks operating in Pakistan from the year 2010 to 2019. The average profit efficiency of Pakistani banks is 57% on an overall basis and is also showing an increasing trend over the study period. Likewise, large banks have the highest profit efficiency (73%) compare to medium (58%) and small (45%) banks, whereas Islamic banks (36%) are less profit efficient relate to conventional banks (61%). Moreover, public banks (50%) are the least efficient banks in Pakistan followed by private (57%) and foreign banks (67%). Results from the second stage concluded that overall profit efficiency has a positive impact on risk management whereas medium, private and conventional banks model also shows the same result. Credit risk has a negative effect on risk management, whereas, in public, foreign, medium and small banks credit risk does not have any relationship with risk management, while in large, private and conventional banks, decrease in credit risk is a signal of improving risk management whereas in Islamic it has a positive impact on risk management. Moreover, liquidity risk is positively related to risk management especially in private, public, and small banks. Return on assets turns out to be the mixed trend factors as it is negatively related to CAR in all banks model, medium, small, foreign, and conventional banks but positively related to risk in large, private, and public models. This indicates that higher profitability leads to better risk management in large, private, and public banks of Pakistan. Similarly, bank size is negatively related to risk management, this indicates that it is difficult to manage risk as banks grow up and expand in size. The findings would help regulatory authorities to set better regulations for improving efficiency, credit, and liquidity quality of banks in Pakistan. This study may also provide useful guidelines to bank managers to maintain an adequate level of bank capital.
Book Synopsis Creating a Safer Financial System by : José Vinãls
Download or read book Creating a Safer Financial System written by José Vinãls and published by International Monetary Fund. This book was released on 2013-05-14 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: The U.S., the U.K., and more recently, the E.U., have proposed policy measures directly targeting complexity and business structures of banks. Unlike other, price-based reforms (e.g., Basel 3 and G-SIFI surcharges), these proposals have been developed unilaterally with material differences in scope, design and implementation schedules. This may exacerbate cross-border regulatory arbitrage and put a further burden on consolidated supervision and cross-border resolution. This paper provides an analysis of the potential implications of implementing different structural policy measures. It proposes a pragmatic and coordinated approach to development of these policies to reduce risk of regulatory arbitrage and minimize unintended consequences. In doing so, it also aims to identify a set of common policy measures that countries could adopt to re-scope bank business models and corporate structures.
Book Synopsis Determinants of Credit Growth and Interest Margins in the Philippines and Asia by : Ms.Tatum Blaise Pua Tan
Download or read book Determinants of Credit Growth and Interest Margins in the Philippines and Asia written by Ms.Tatum Blaise Pua Tan and published by International Monetary Fund. This book was released on 2012-05-01 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: Despite robust deposit growth, credit growth has been sluggish in the Philippines. We attribute this to legacy weaknesses in bank balance sheets, consumption-led economic growth, and relatively high net interest margins. Bank-level analysis suggests that interest margins in the Philippines rise with bank size, bank capitalization, foreign ownership, overhead costs and tax rates. Using bank-level data for a number of Asian economies, we find that higher growth, lower inflation, higher reserve requirements, greater banking sector development, smaller stock market development and lower government deficits reduce net interest margins, informing the policy debate on strengthening financial intermediation in the Philippines.
Book Synopsis Bank Profitability and Financial Stability by : Ms.TengTeng Xu
Download or read book Bank Profitability and Financial Stability written by Ms.TengTeng Xu and published by International Monetary Fund. This book was released on 2019-01-11 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze how bank profitability impacts financial stability from both theoretical and empirical perspectives. We first develop a theoretical model of the relationship between bank profitability and financial stability by exploring the role of non-interest income and retail-oriented business models. We then conduct panel regression analysis to examine the empirical determinants of bank risks and profitability, and how the level and the source of bank profitability affect risks for 431 publicly traded banks (U.S., advanced Europe, and GSIBs) from 2004 to 2017. Results reveal that profitability is negatively associated with both a bank’s contribution to systemic risk and its idiosyncratic risk, and an over-reliance on non-interest income, wholesale funding and leverage is associated with higher risks. Low competition is associated with low idiosyncratic risk but a high contribution to systemic risk. Lastly, the problem loans ratio and the cost-to-income ratio are found to be key factors that influence bank profitability. The paper’s findings suggest that policy makers should strive to better understand the source of bank profitability, especially where there is an over-reliance on market-based non-interest income, leverage, and wholesale funding.
