Bank-Specific & Macroeconomic Indicators of Profitability (An Empirical Evidence from the Investment Banks of Pakistan)

Published on Sep 9, 2019
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Abstract
This paper aims to examine the financial structure as a determinant of the financial performance of investment banks of Pakistan. For this purpose the quantitative research methodology is used in this study as secondary data of 11 years (2006-2016) of seven investment banks of Pakistan by utilizing bank-level data and data from DWH Department of State Bank of Pakistan, For evaluating cross-section time series data, unbalance panel regression is used to determine Bank Specific & Macroeconomic indicators of Profitability of investment banks of Pakistan. Five bank specifics and macroeconomic indicators were used to predict investment banks profitability. Generally, the findings of this paper confirm previous findings. To achieve its objectives, multiple tests are run such as descriptive statistics, stationary test, correlation, and panel regression model, and Hausman test, fixed and random effect model had run and discussed. Controlling with internal factor mainly equity financing, debt financing and size of investment banks gives significant results and operating efficiency and inflation gives insignificant on investment banks of Pakistan. The study also finds that banks internal determinants of profitability were different among Pakistani investment banks. These findings may be helpful for Investment bankers, shareholders, investors for making financial decisions and improving financial policies in the future.
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