IMPACT OF BANK SIZE AND OPERATING EFFICIENCY ON CREDIT RISK: EVIDENCE FROM COMMERCIAL BANKS OF PAKISTAN.

Abstract

Purpose This thesis evaluates the impact of bank size, operating efficiency, liquidity, earning assets and Non-performing assets to Non-performing assets & total equity (NPA) on credit risk managing of commercial banks of Pakistan. Secondary data for the period of 2007 to 2017 is used, which was taken from the most reliable source for banks in Pakistan, the official website of State bank ofPakistan. Methodology & Design The research design in this paper is explanatory in nature and we are using panel data a combination of cross sectional and time series. Explanatory research deals with pre-existing phenomenon with different data set, variables and time period or different region etc. Findings The study found that relationship of bank size and operating efficiency are insignificant with credit risk. The results further show that the relationship of Liquidity with credit risk is negative and significant. The relationship of MGT and NPA with credit risk is positive and significant in commercial banks of Pakistan. Limitations: Our current study would not include all commercial banks which are currently working due to non-availability of data from period 2007 to 2017. Implications: Results are instants for policy makers. As we know credit risk management is the demand of all banks.