A Determinants of Bank Profitability
Keywords:
Banks are the most vital financial intermediaries in economy, which has a profitable banking industry; in order to survive undesirable shock as well as subsidize the constancy under the whole economy. However, the main purpose of this research is in the direction of analyzing factors affecting banks’ effectiveness all over Pakistan by means of sets of targeted facts and figures of twenty panels from 2005 to 2015. This study is developed with the help of AOLS technique which is used to examine the effect of different factors such as resources, debts, justice, securities, economic growth, price increases, price decreases, and market capitalization on major profitability signs such as (ROA), (ROE), (ROCE) and (NIM). The experimental consequences analyzed solid facts which stated the following conclusion, i.e., internal factors and external factors create an adverse impact on the level of profitability. An outcome by this research is important to different researchers. This research study proposed that by the concentration & reengineering the internal drivers the banks can improve its profitability and performance.Abstract
This study examines the factors influencing banks’ effectiveness in Pakistan, emphasizing their critical role as financial intermediaries in maintaining economic stability and profitability. Using panel data from 20 banks covering 2005–2015, the study applies the AOLS technique to analyze the impact of internal and external factors—such as resources, debt, regulatory justice, securities, economic growth, inflation, deflation, and market capitalization—on key profitability indicators, including ROA, ROE, ROCE, and NIM. The findings reveal that both internal and external factors negatively affect bank profitability. The study concludes that focusing on and optimizing internal drivers can enhance banks’ performance and profitability, providing practical guidance for managers and valuable insights for researchers.
