Impact Of Credit Risk And Capital Adequacy Ratio On Performance Of The Domestic Banking Sector In Pakistan

Abstract

Tlus study empirically finds out the factors which are affecting the performance of domestic banking sector of Pakistan. Performance of banking sector is measured by return on assets (ROA) and return on equity (ROE). For this aim, panel data method (fixed effects model) is applied on data which is obtained from observations of 345 from financial banks statements during the period 2011-2018. The regression analysis ofROA model show that CAR has positive and significant impact on ROA and NPL has negative and significant impact on ROA. The second regression analysis of ROE model show that CAR, bank size and NPL is significant impact on ROE, where bank size and CAR have positive impact on bank petfonnance and NPL bas negative and significant impact on performance of banks.