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:	2018
Subjects:	HG Finance
Online Access:	http://ir.unimas.my/id/eprint/30076/1/Hafiz.pdf
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spelling	my-unimas-ir.300762023-04-17T02:56:12Z Bank Specific and Macroeconomic Determinants of Bank Stability, Profitability and Efficiency in Pakistan 2018 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 http://ir.unimas.my/id/eprint/30076/ http://ir.unimas.my/id/eprint/30076/1/Hafiz.pdf text en validuser phd doctoral University Malaysia Sarawak (UNIMAS) Faculty of Economics and Business
institution	Universiti Malaysia Sarawak
collection	UNIMAS Institutional Repository
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
qualification_name	Doctor of Philosophy (PhD.)
qualification_level	Doctorate
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
granting_institution	University Malaysia Sarawak (UNIMAS)
granting_department	Faculty of Economics and Business
publishDate	2018
url	http://ir.unimas.my/id/eprint/30076/1/Hafiz.pdf
_version_	1783728376060575744

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

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