Determinants of Financial Performance: Empirical Evidence from Pakistan

Abstract

In economic development banks serve as a key agent with entrepreneur. Due to the importance of banks in the development of any economy than it is necessary to monitor analyze its performance and observe those factors which are responsible for the performance. Study analyzed all the banks licensed in Pakistan by using the multiple linear regressions over the period 2006-2014. Capital ratio, asset quality, management capability, earning ability and liquidity are taken as explanatory variable while financial performance which is measured by return on asset, return on equity and net interest margin is used as response variable. It was observed in the study that asset quality and capital ratio are factors which influence the performance of banks in Pakistan.

Keywords: Firm performance, licensed commercial banks, financial determinants and capital markets