Bank Profitability and Risk Taking in Banks Under Low Interest Rate, Evidence from Banking Sector of Pakistan PDF Download
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Author: Zarmash
Publisher:
ISBN:
Category :
Languages : en
Pages : 24
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Book Description
The aim of the paper is to analyze the effect of low interest rate on profitability and risk-taking in Pakistani banking sector. By applying static modeling approach and using panel data we collected data from 20 Pakistani banks from 2010-2017 time span. The literature gap existed on this topic in under developing countries. We used two different models for Profitability and Risk-Taking. For Profitability we used NIM, Profit, ROA and ROE as performance proxy. We found the existence of negative relation between low interest rate and profitability which means low interest rate has bad effect on the profitability of the banks. While PCL and TCR taken as proxy for Risk-taking. We also found negative association between Short term interest rate and Risk-taking (TCR and PCL) which means that short term interest rate also effect bank risk-taking. Our study is limited to small sample size and few relevant variables. Further study can explore the underlying phenomenon by using large set of data and more sophisticated approach.
Author: Zarmash
Publisher:
ISBN:
Category :
Languages : en
Pages : 24
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Book Description
The aim of the paper is to analyze the effect of low interest rate on profitability and risk-taking in Pakistani banking sector. By applying static modeling approach and using panel data we collected data from 20 Pakistani banks from 2010-2017 time span. The literature gap existed on this topic in under developing countries. We used two different models for Profitability and Risk-Taking. For Profitability we used NIM, Profit, ROA and ROE as performance proxy. We found the existence of negative relation between low interest rate and profitability which means low interest rate has bad effect on the profitability of the banks. While PCL and TCR taken as proxy for Risk-taking. We also found negative association between Short term interest rate and Risk-taking (TCR and PCL) which means that short term interest rate also effect bank risk-taking. Our study is limited to small sample size and few relevant variables. Further study can explore the underlying phenomenon by using large set of data and more sophisticated approach.
Author: Saira Anis
Publisher: GRIN Verlag
ISBN: 3668535906
Category : Business & Economics
Languages : en
Pages : 51
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Book Description
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.
Author: Ms.TengTeng Xu
Publisher: International Monetary Fund
ISBN: 1484393805
Category : Business & Economics
Languages : en
Pages : 54
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Book Description
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.
Author: Muneer Ahmed
Publisher:
ISBN:
Category :
Languages : en
Pages : 37
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Book Description
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.
Author: Muhammad Asadullah Bilal
Publisher: GRIN Verlag
ISBN: 3346095622
Category : Business & Economics
Languages : en
Pages : 62
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Book Description
Master's Thesis from the year 2018 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: B, , language: English, abstract: The purpose of this research study is to figure out the differences in rules/regulations and practices regarding risk management in Islamic and conventional banks in Pakistan. Keeping in view the research questions, the nature of this research is a qualitative case study. The findings of the study reveal that there exists a substantial difference between Islamic and conventional banks in risk management practices, risk identification, liquidity risk analysis and risk governance. Islamic bank is performing competently in liquidity risk analysis, whereas, conventional bank is competent in risk management practice, risk identification, and risk governance. The risk management, risk monitoring and reporting, and liquidity risk analysis are weak in Islamic banks. Whereas, risk analysis and assessment are weak in conventional banks. Due to lack of risk management training and limited knowledge of risk management practices, understanding of risk management practices is weak in Islamic bank. The study also reveals that in terms of rules and regulations, there is no proper institutionalisation of Islamic institutions regarding risk management as compared to conventional banking where the risk management practices are institutionalised by Basel Committee on Banking Supervision.
Author: M. Khan
Publisher: Springer
ISBN: 0230582303
Category : Business & Economics
Languages : en
Pages : 290
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Book Description
This book explores the theoretical and practical features of Islamic banking. Using Pakistan as a detailed illustration, the text discusses recent developments and future prospects, demonstrating the model underpinning interest-free banking. It assesses the practical success of interest-free banking at both individual banks and state level.
Author: Robina Malik
Publisher:
ISBN:
Category :
Languages : en
Pages : 16
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Book Description
Banks play an important and vital role in the development of the economies. Its importance can't be neglected. The aim of this study is to investigate the impact of internal and external causes which affect the profitability. Internal causes include Size (LnTA), Capital (CAP), Liquidity (LQD), debt to equity ratio (DE), Non performing loan to Gross advances (NPL), portfolio composition (PC), Loan to Total Assets (LA) whereas external causes include Gross Domestic Product(GDP), Inflation (INF), and Unemployment (UNMP). Return on Assets and Return on Equity are used as a measure of profitability. Data is collected for twelve (12) variables of twenty one (21) banks including four (4) public and seventeen (17) private banks, for the year of 2006-2011, from the annual reports of banks, index mundi and financial statement analysis of State Bank of Pakistan (SBP). EViews is used for deriving the results of descriptive, correlation and panel Regression analysis. Results show that size has positive significant effect in both models (ROA&ROE).
Author: Daniel C. L. Hardy
Publisher: International Monetary Fund
ISBN:
Category : Banks and banking
Languages : en
Pages : 40
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Book Description
Author: Rehana Siddiqui
Publisher:
ISBN:
Category : Bank profits
Languages : en
Pages : 30
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Book Description
Author: Syed Rasool
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This empirical work investigates banking sector of Pakistan and comments on bank's profitability in the post crisis scenario. Study explores how sector specific variables are involved in profitability when there is process of financial liberalization, and the repercussion of financial fragility persists due to severe financial crises. A sample of 26 banks were selected on the basis of financial deepness of each bank for a period 6 years ranging from 2006-2011 (short panel). The study used fixed effect regression model for estimation, the viability of which was confirmed statistically by executing Housman test. White cross section covariance approach was adopted to achieve consistency in parameters. Findings help to conclude that sector specific variables have considerable gravity to effect banking profitability but inexorable link between macroeconomic soundness and financial stability could not be confirmed, believing thereby that Pakistani macroeconomic scenario stands an outlier and deviating from rest of the world.
