Abstract:
Purpose: The objective of the study is to analyze the impact of foreign banks and
performing loans on the profitability of banking sector of Pakistan using secondary data.
non Methodology: All the data will be taken from World Bank databases such as World
Development Indicators (WDI) and Global Financial Development Indicator (GFDI) for the
entire Pakistan centralized data. The sample period was selected between 1998 and 2017 due to
consistent available annual data of Pakistan.
Findings: The results have shown that foreign banks and economic growth have positively
significant impact on bank profitability while bank deposit to GDP and nonperforming loans to
GDP have negatively significant impact on bank profitability. However, natural log of foreign
bank assets and real effective exchange rate have no effect on bank profitability.
Conclusion: The inclusion of foreign bank’s assets and real effective exchange
shown any noteworthy influence upon the profitability of banks. Thirdly, the general
phenomenon has been accepted in this study as well that NPLs tends to mitigate the profitability
of banking sector.
Implications: The economists should focus
rate of GDP is the determinant of improvements in many sectors and one ofthem is the Banking
sector.
rate has not
on the increasing growth rate of GDP. A growing
