Impact of Risk Factors on Profitability: A Theoretical work on State Bank of Pakistan

Abstract

This study analyses the impact of different kinds ofrisk on the Profitability. The categories of risk analysed are Credit Risk, Exchange Rate Risk and Interest Rate risk. Data for the research has been collected from the State Bank of Pakistan, for the years 2006- 2019.A time series analysis has been conducted and data has been collected through secondary resources and has been tested upon using the ARDL approach, the Augmented Dickey-Fuller Test and OLS. The results show that credit risk, exchange rate risk and interest risk have no significant and positive impact on profitability .The relationship established through testing is week. This leads to the conclusion that bank profitability is affected by factors other than credit, exchange and interest Risk. JEL Classification: C10;C23;D81;G32