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.
Authors
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.
Keywords
Economic Growth, Corruption
DOI Number
10.31703/ger.2020(V-I).07
Page Nos
75-89
Volume
V
Issue
I
