Statistical Analysis of the Factors Affecting the Profitability of Commercial Banks in Pakistan

• Activity Number: 310
• Type: Contributed
• Date/Time: Tuesday, August 6, 2013 : 8:30 AM to 10:20 AM
• Sponsor: Business and Economic Statistics Section
• Author(s): Salahuddin Khan*+
• Companies: University of Peshawar
• Keywords: Bank-Specific factors ; Multicollinearity ; Autocorrelation ; All Possible Regression

Abstract

During the period 2005-2009, the world banking sector showed an enormous declining trend in profitability due to worldwide economic recession. This study is carried out to examine various factors, which has an influence on the Pakistani commercial banks profitability during this period. The data used in this study is the quarterly bank level data for period 2005-2009.To determine the important factors in getting maximum profitability, panel data regression technique is used. Return on Assets (ROA) is used as dependent variable and bank specific factors (interest income, bank size, expense management, non-interest income, deposits and credit risks) are used as independent variables. All the analysis of this study is carried out using the Statistical Package "Eviews". The analysis suggests that three variables: bank size, deposits and non-interest income have significant affect on the profitability of Pakistani commercial banks.