THE IMPACT OF MACROECONOMIC VARIABLES ON THE PROFITABILITY OF LISTED COMMERCIAL BANKS IN PAKISTAN
Journal Title: European Journal of Business and Social Sciences - Year 2013, Vol 2, Issue 9
Abstract
Based on vital contribution of the commercial banks to economic progress of Pakistan, this study investigates the impact of macroeconomic variables on profitability of public limited commercial banks in Pakistan for years 2001- 2011. Pooled Ordinary Least Square (POLS) method is used to examine the effect of 3 major external factors; inflation rate, real gross domestic product (GDP) and real interest rate on profitability indicators; return on assets (ROA), return on equity (ROE) and equity multiplier (EM) ratios in 3 separate models. The empirical findings indicate a strong positive relationship of real interest rate with ROA, ROE and EM. Secondly, real GDP is found to have an insignificant positive effect on ROA, but an insignificant negative impact on ROE and EM. Inflation rate on the other hand, has a negative link with all 3 profitability measures. Overall, the selected macroeconomic factors are found to have a negligible impact on earnings of commercial banks.
Authors and Affiliations
Sara Kanwal| University of Central Punjab Lahore sara.kanwal89@gmail.com, Muhammad Nadeem| (Corresponding Author) University of Central Punjab Lahore nadeem_umt@hotmail.com
Keywords
Related Articles
- EP ID EP10335
- DOI -
- Views 298
- Downloads 14
THE STATISTICAL DESCRIPTION OF BANKRUPTCY RISK – FOLLOWING THE EXAMPLE OF ORSOVA SHIPYARD S.A AND S.C SEVERNAV S.A DROBETA TURNU-SEVERIN
The motivation of the present research is that the profound transformations that the economic and social fields are facing and their rapidity are main elements of the risk manifestations that could affect the activity...
MEDIA AND SECURITY IN NIGERIA
Today, an information explosion is taking place in the world and the mass media of communication increasingly enjoy a position of considerable importance throughout the globe. This paper on Media and Security examine...
Myths, Managers, and Formats
The principal relationships between myths, the kind of reality they generated, and the roles of formats and of top management aligned to this process will be looked at. Due to their ability to generate evolutionary co...
A COMPARATIVE STUDY FOR APPOINTMENT PROCEDURES OF UNIVERSITY PRESIDENTS
The administration structure plays a central role in the development of a university, both academically and administratively, and both for attracting qualified academic staff and students. The role of presidents (cha...
IMPLEMENTATION OF A LEAN PRODUCTION COMPONENTS SUPERMARKET IN AN AUTOPARTS INDUSTRY – CASE STUDY
Markets competition is fierce and has been intensified in the last two decades. Several factors contribute to this fact, such as: intensive use of information technology, scarcity and difficulty of capital access, mar...