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CREDIT RISK AND PROFITABILITY OF COMMERCIAL BANKS IN PAKISTAN

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07 Pages : 75-89

http://dx.doi.org/10.31703/ger.2020(V-I).07      10.31703/ger.2020(V-I).07      Published : Mar 2020

Credit Risk and Profitability of Commercial Banks in Pakistan

Abstract

    Credit risk in the credit portfolio of financial institutions has dented their profitability. This study examines the relationship between credit risk and profitability of commercial banks in Pakistan. For this purpose three performance measuresROA, ROE, and NIM are used by the study. To test the relationship and impact over the period 2006-2015 the study involved 28 commercial banks. During the period under investigation, the findings of the study reveal that credit risk, represented by loan loss provisions, has a meaningful effect on the profitability measures. The findings provide exciting insights into the influence of credit risk, besides other variables in the study, on the selected commercial banks profitability inside Pakistan, for bank managers, and foremost for policymakers. The study also has policy relevance in the form of providing policymakers sufficient evidence related to the presence of credit risk in the loan portfolio of the banking sector and the ways to overcome this chronic problem.

    Economic Growth, Corruption

    (1) Sohail Farooq
    Assistant Professor,Department of Economics,Hazara University, Mansehra, KP, Pakistan.
    (2) Raza Muhammad Khan
    Teaching Assistant,Department of Economics,Hazara University, Mansehra, KP, Pakistan.
    (3) Muhammad Akram Gilal
    Associate Professor,Department of Economics,University of Sindh, Jamshoro, Sindh, Pakistan.
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Cite this article

APA

CHICAGO

    CHICAGO : Farooq, Sohail, Raza Muhammad Khan, and Muhammad Akram Gilal. 2020. "Credit Risk and Profitability of Commercial Banks in Pakistan." Global Economics Review, V (I): 75-89 doi: 10.31703/ger.2020(V-I).07

HARVARD

    HARVARD : FAROOQ, S., KHAN, R. M. & GILAL, M. A. 2020. Credit Risk and Profitability of Commercial Banks in Pakistan. Global Economics Review, V, 75-89.

MHRA

    MHRA : Farooq, Sohail, Raza Muhammad Khan, and Muhammad Akram Gilal. 2020. "Credit Risk and Profitability of Commercial Banks in Pakistan." Global Economics Review, V: 75-89

MLA

    MLA : Farooq, Sohail, Raza Muhammad Khan, and Muhammad Akram Gilal. "Credit Risk and Profitability of Commercial Banks in Pakistan." Global Economics Review, V.I (2020): 75-89 Print.

OXFORD

    OXFORD : Farooq, Sohail, Khan, Raza Muhammad, and Gilal, Muhammad Akram (2020), "Credit Risk and Profitability of Commercial Banks in Pakistan", Global Economics Review, V (I), 75-89

TURABIAN

    TURABIAN : Farooq, Sohail, Raza Muhammad Khan, and Muhammad Akram Gilal. "Credit Risk and Profitability of Commercial Banks in Pakistan." Global Economics Review V, no. I (2020): 75-89. https://doi.org/10.31703/ger.2020(V-I).07