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Bank Specific and Macroeconomic Determinants of Bank Stability, Profitability and Efficiency in Pakistan

The aim of this study is to investigate the determinants of bank stability, profitability and efficiency in the banking sector of Pakistan. This study mainly targets three separate analyses for bank stability, profitability and bank management efficiency to present a comprehensive analysis of overa...

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Main Author: Hafiz, Bin Muhammad Ali
Format: Thesis
Language:English
Published: Universiti Malaysia Sarawak (UNIMAS) 2018
Subjects:
HG Finance
Online Access:http://ir.unimas.my/id/eprint/30076/3/Hafiz.pdf
http://ir.unimas.my/id/eprint/30076/
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spelling my.unimas.ir.300762024-07-25T02:34:11Z http://ir.unimas.my/id/eprint/30076/ Bank Specific and Macroeconomic Determinants of Bank Stability, Profitability and Efficiency in Pakistan Hafiz, Bin Muhammad Ali HG Finance The aim of this study is to investigate the determinants of bank stability, profitability and efficiency in the banking sector of Pakistan. This study mainly targets three separate analyses for bank stability, profitability and bank management efficiency to present a comprehensive analysis of overall commercial banks performance in Pakistan. The sample data is consists over 5 Islamic and 19 conventional banks over a sample period of 2007 to 2015. The study employed different panel data econometric techniques, namely, pooled ordinary least square (POLS), fixed effect (FE) model and random effect (RE) model using Hausman test specification. Additionally, a series of diagnostic was also perfonned namely, multicollinearity, heteroscedasticity and serial correlation test. For bank stability models, the results of this study indicate that bank size has a negative effect on stability under Z-score model while a positive relationship was found when stability measured through risk-adjusted return on asset (RAROA) and risk-adjusted equity to asset ratio (RAEA). Moreover, funding risk has a positive relationship with bank stability under an three models. On the other side, the panel least square regression with fixed effect model (FEM) suggests that bank profitability was significantly influenced by bank size, credit risk and bank stability, whereas bank efficiency is significantly predicted by liquidity risk, credit risk and funding risk. To my knowledge, limited work is available to analyze the bank stability, profitability and bank management efficiency together with the consistency of existing panel data techniques. The findings of this study have provided some new insights, which offer support to policy makers. Therefore, the implications of the results are manifold. First, the bank size, credit risk and bank stability should be given much attention to generate more profits. Similarly, liquidity risk, credit risk and funding risk needed extra vigilance from the bank managers for effective and efficient management of risks. Second, the credit worthiness of a borrower should analyze before lending them to mitigate the default risk. This will helps the banking sector to look for competitiveness and optimality. Lastly, efficient banking system also required changes both domestically and internationally. Universiti Malaysia Sarawak (UNIMAS) 2018 Thesis NonPeerReviewed text en http://ir.unimas.my/id/eprint/30076/3/Hafiz.pdf Hafiz, Bin Muhammad Ali (2018) Bank Specific and Macroeconomic Determinants of Bank Stability, Profitability and Efficiency in Pakistan. PhD thesis, University Malaysia Sarawak (UNIMAS).
institution Universiti Malaysia Sarawak
building Centre for Academic Information Services (CAIS)
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Malaysia Sarawak
content_source UNIMAS Institutional Repository
url_provider http://ir.unimas.my/
language English
topic HG Finance
spellingShingle HG Finance
Hafiz, Bin Muhammad Ali
Bank Specific and Macroeconomic Determinants of Bank Stability, Profitability and Efficiency in Pakistan
description The aim of this study is to investigate the determinants of bank stability, profitability and efficiency in the banking sector of Pakistan. This study mainly targets three separate analyses for bank stability, profitability and bank management efficiency to present a comprehensive analysis of overall commercial banks performance in Pakistan. The sample data is consists over 5 Islamic and 19 conventional banks over a sample period of 2007 to 2015. The study employed different panel data econometric techniques, namely, pooled ordinary least square (POLS), fixed effect (FE) model and random effect (RE) model using Hausman test specification. Additionally, a series of diagnostic was also perfonned namely, multicollinearity, heteroscedasticity and serial correlation test. For bank stability models, the results of this study indicate that bank size has a negative effect on stability under Z-score model while a positive relationship was found when stability measured through risk-adjusted return on asset (RAROA) and risk-adjusted equity to asset ratio (RAEA). Moreover, funding risk has a positive relationship with bank stability under an three models. On the other side, the panel least square regression with fixed effect model (FEM) suggests that bank profitability was significantly influenced by bank size, credit risk and bank stability, whereas bank efficiency is significantly predicted by liquidity risk, credit risk and funding risk. To my knowledge, limited work is available to analyze the bank stability, profitability and bank management efficiency together with the consistency of existing panel data techniques. The findings of this study have provided some new insights, which offer support to policy makers. Therefore, the implications of the results are manifold. First, the bank size, credit risk and bank stability should be given much attention to generate more profits. Similarly, liquidity risk, credit risk and funding risk needed extra vigilance from the bank managers for effective and efficient management of risks. Second, the credit worthiness of a borrower should analyze before lending them to mitigate the default risk. This will helps the banking sector to look for competitiveness and optimality. Lastly, efficient banking system also required changes both domestically and internationally.
format Thesis
author Hafiz, Bin Muhammad Ali
author_facet Hafiz, Bin Muhammad Ali
author_sort Hafiz, Bin Muhammad Ali
title Bank Specific and Macroeconomic Determinants of Bank Stability, Profitability and Efficiency in Pakistan
title_short Bank Specific and Macroeconomic Determinants of Bank Stability, Profitability and Efficiency in Pakistan
title_full Bank Specific and Macroeconomic Determinants of Bank Stability, Profitability and Efficiency in Pakistan
title_fullStr Bank Specific and Macroeconomic Determinants of Bank Stability, Profitability and Efficiency in Pakistan
title_full_unstemmed Bank Specific and Macroeconomic Determinants of Bank Stability, Profitability and Efficiency in Pakistan
title_sort bank specific and macroeconomic determinants of bank stability, profitability and efficiency in pakistan
publisher Universiti Malaysia Sarawak (UNIMAS)
publishDate 2018
url http://ir.unimas.my/id/eprint/30076/3/Hafiz.pdf
http://ir.unimas.my/id/eprint/30076/
_version_ 1806456023967334400
score 13.211869

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