IMPACT OF INTERNAL FACTORS ON THE COMMERCIAL BANKS PERFORMANCE: AN EVIDENCE FROM LISTED BANKS IN PAKISTAN
This study investigates the impact of internal factors on commercial bank’s performance listed on Pakistan Stock Exchange. Sample size of nine Pakistani commercial banks listed on Pakistan Stock Exchange i.e. National Bank of Pakistan (NBP), Habib Bank Limited (HBL), Muslim Commercial Bank (MCB), Allied Bank Limited (ABL), United Bank Limited (UBL), Meezan Bank Limited (MBL), Bank Alfalah Limited (BAL), The Bank of Punjab (BoP), Bank Al Habib Limited (BaHL) are selected. This sample represent more than 80% of total population of commercial banks listed on Pakistan Stock Exchange. Non-Performing Loan through NPL ratio, Deposit/Borrowing, Advances/Investments are taken as internal factors. Panel data of five years from 2013 to 2018 for internal factors is collected. Data for internal factors is selected from annual reports of these nine commercial banks. Balanced Panel data is used for empirical study. Panel least square regression method is used to estimate the impact of internal factors i.e. Advances/Investments, Deposit/Borrowing, NPL, GDP rate on bank performance which is measured through return on assets, return on equity and earning per share. The regression equations are analyzed by checking fixed and random effect which is inhibited by applying the Haussmann test, Random effect is used in this study. By employing a panel data regression model with the random effect technique, empirical result of the study were obtained. The empirical results of the study indicates that Advances/Investment, Deposithas positive impact on bank performance while Borrowing, NPL has negative impact bank performance. This Research is helpful both for stakeholders of banks and students of Finance to further peruse this research in other industries as well.