Year 2016,
Volume: 8 Issue: 1, 107 - 116, 14.07.2016
Abstract
This paper aims at examining the level of influence the macroeconomic variables (Exports & Imports) have on the profitability of commercial banks in Pakistan. The study covers the period 2005 to 2009 on quarterly basis. The period from 2005 to 2009 was chosen because during the given period, the global financial sector has shown a trend of significant decrease in profitability due to the global economic downturn (crisis) with many reputable banks liquidation deposit and this also negatively affected the banking sector in Pakistan including both private and public. In the study least square regression technique is applied to the data for analysis, in the line with Indranarain et al. (2009). The study used the Return on Assets (ROA) as a measure of profitability. Two variables, including exports and imports are used as explanatory variables. Both exports and imports are key factors in any country’s economy around the world. The activity of imports and exports always brings employment, economic growth, and prosperity to the countries. All analyzes of this study are performed using the statistical software "Eviews-7". To test the autocorrelation in the collected data, Durbin-Watson statistic is used. Multicollinearity of the data is diagnosed by making the correlation matrix. Stationarity of the data is checked by using the “individual unit root test”. The results obtained from the regression models show that both imports and exports are significantly affecting the bank’s profitability. The better regression model is consisting of the macro-economic variable exports.
References
- Anna PIV & Chan HS. (2009). Determinants of Bank Profitability in Macao. Macau Monetary Research Bulletin 93- 113.
- Arize Augustine C. (2002). Imports and Exports in 50 Countries Test of Co integration and Structural Breaks. International Review of Economics and Finance. 11: 101-115.
- A Aurangzeb, T Stengos & A U Muhammad. (2005). Short- Run and Long-Run Effects of Exchange Rate Volatility on the Volume of Exports: A Case Study for Pakistan. International Journal of Business and Economics. 4, No. 3,: 209-222.
- A Aguirre and C Calderon. (2005). Real exchange rate misalignments and economic performance. Working Paper No. 315, (Central Bank of Chile)
- B Egert, & A M Zumaquero. (2005). Exchange Rate Regimes, Foreign Exchange Volatility and Export Performance in Central and Eastern Europe Just Another Blur Project?. (Oesterr eichische National Bank)
- Baltagi BH. (2005). Econometric Analysis of Panel Data. 3rd edition, John Wiley & Sons, Chichester.
- Baltagi BH. (2001). Econometric Analysis of Panel Data. 2nd edition, John Wiley & Sons, Chichester.
- Farzana Shaheen. (2013). Fluctuations in Exchange Rate and its Impact on Macroeconomic Performance of Pakistan. The Dialogue. Vol.8:No.4
- Gujarati D. (2004). Basic Econometrics. 4th edition, New York, McGraw-Hill.
- Husain A M, A Mody & KS Rogoff. (2004). Exchange Rate Regime Durability and Performance in Developing Versus Advanced Economies. Journal of Monetary Economics. 52:1: 35-64.
- Irandoust, Manuchehr & Johan Ericsson. (2004). Are Imports and Exports Co integrated? An International Comparison. Metroeconomica. 55: 49-64.
- Indranarain Ramlall. (2009). Bank-Specific, Industry- Specific and Macroeconomic Determinants of Profitability in Taiwanese Banking System: Under Panel Data Estimation. International Research Journal of Finance and Economics. Issue 34, 160-167.
- Kyriaki Kosmidou, Sailesh Tanna & Fotios Pasiouras. (2005). Determinants of Profitability of Domestic UK Commercial Banks: Panel Evidence from the Period 1995-2002. Money Macro and Finance Research Group. 37th conference, 1-27, 2005.
- Khan Mohsin S. & Malcolm D Knight. (1988). Import Compression and Export Performance in Developing Countries. Review of Economics and Statistics. 70: 315-321.
- Koukouritakis Minoas. (2004). EU Accession Effects on Trade Flows: The Case of Greece. South Eastern Europe Journal of Economics. 2: 61-79.
- Karunakar M, Vasuki K & Saravanan S. (2008). Are Non- Performing Assets Gloomy Or Greedy From Indian Perspective?. Research Journal of Social Sciences. 3: 4-12.
- Otuori O H. (2013). Influence of exchange rate determinants on the performance of commercial banks in Kenya. European Journal of Management Sciences and Economics. Vol.1:86-98. 18.Panayiotis PA, Sophocles NB & Matthaios DD. (2005). Bank- Specific, Industry-Specific and Macroeconomic Determinants of Bank Profitability. working paper No.25, Bank of Greece 5- 35.
- Sadia Bader. (2006). Determining Import Intensity of Exports for Pakistan. State bank of Pakistan working paper No.15
- Solnik B. (2000). International Investments, 4th edition. Addison-Wesley. Wesley Longman
- Valentina F, McDonald C & Schumacher L. (2009). The Determinants of Commercial Bank Profitability in Sub- Saharan Africa. IMF working Paper. WP/09/15, 2-32.
Year 2016,
Volume: 8 Issue: 1, 107 - 116, 14.07.2016
Abstract
References
- Anna PIV & Chan HS. (2009). Determinants of Bank Profitability in Macao. Macau Monetary Research Bulletin 93- 113.
- Arize Augustine C. (2002). Imports and Exports in 50 Countries Test of Co integration and Structural Breaks. International Review of Economics and Finance. 11: 101-115.
- A Aurangzeb, T Stengos & A U Muhammad. (2005). Short- Run and Long-Run Effects of Exchange Rate Volatility on the Volume of Exports: A Case Study for Pakistan. International Journal of Business and Economics. 4, No. 3,: 209-222.
- A Aguirre and C Calderon. (2005). Real exchange rate misalignments and economic performance. Working Paper No. 315, (Central Bank of Chile)
- B Egert, & A M Zumaquero. (2005). Exchange Rate Regimes, Foreign Exchange Volatility and Export Performance in Central and Eastern Europe Just Another Blur Project?. (Oesterr eichische National Bank)
- Baltagi BH. (2005). Econometric Analysis of Panel Data. 3rd edition, John Wiley & Sons, Chichester.
- Baltagi BH. (2001). Econometric Analysis of Panel Data. 2nd edition, John Wiley & Sons, Chichester.
- Farzana Shaheen. (2013). Fluctuations in Exchange Rate and its Impact on Macroeconomic Performance of Pakistan. The Dialogue. Vol.8:No.4
- Gujarati D. (2004). Basic Econometrics. 4th edition, New York, McGraw-Hill.
- Husain A M, A Mody & KS Rogoff. (2004). Exchange Rate Regime Durability and Performance in Developing Versus Advanced Economies. Journal of Monetary Economics. 52:1: 35-64.
- Irandoust, Manuchehr & Johan Ericsson. (2004). Are Imports and Exports Co integrated? An International Comparison. Metroeconomica. 55: 49-64.
- Indranarain Ramlall. (2009). Bank-Specific, Industry- Specific and Macroeconomic Determinants of Profitability in Taiwanese Banking System: Under Panel Data Estimation. International Research Journal of Finance and Economics. Issue 34, 160-167.
- Kyriaki Kosmidou, Sailesh Tanna & Fotios Pasiouras. (2005). Determinants of Profitability of Domestic UK Commercial Banks: Panel Evidence from the Period 1995-2002. Money Macro and Finance Research Group. 37th conference, 1-27, 2005.
- Khan Mohsin S. & Malcolm D Knight. (1988). Import Compression and Export Performance in Developing Countries. Review of Economics and Statistics. 70: 315-321.
- Koukouritakis Minoas. (2004). EU Accession Effects on Trade Flows: The Case of Greece. South Eastern Europe Journal of Economics. 2: 61-79.
- Karunakar M, Vasuki K & Saravanan S. (2008). Are Non- Performing Assets Gloomy Or Greedy From Indian Perspective?. Research Journal of Social Sciences. 3: 4-12.
- Otuori O H. (2013). Influence of exchange rate determinants on the performance of commercial banks in Kenya. European Journal of Management Sciences and Economics. Vol.1:86-98. 18.Panayiotis PA, Sophocles NB & Matthaios DD. (2005). Bank- Specific, Industry-Specific and Macroeconomic Determinants of Bank Profitability. working paper No.25, Bank of Greece 5- 35.
- Sadia Bader. (2006). Determining Import Intensity of Exports for Pakistan. State bank of Pakistan working paper No.15
- Solnik B. (2000). International Investments, 4th edition. Addison-Wesley. Wesley Longman
- Valentina F, McDonald C & Schumacher L. (2009). The Determinants of Commercial Bank Profitability in Sub- Saharan Africa. IMF working Paper. WP/09/15, 2-32.
There are 20 citations in total.
Details
| Other ID | JA43TF27RV |
|---|---|
| Journal Section | Review Article |
| Authors | |
| Publication Date | July 14, 2016 |
| Published in Issue | Year 2016Volume: 8 Issue: 1 |
