Comparative Insights into Pakistan’s Microfinance Sector

Abstract

This study has focused mainly on identifying the impact of Cam ratios on return on assets in Pakistan. This study has considered capital adequacy ratio, asset quality, management efficiency, earning ability and liquidity as independent variables. Whereas, return on assets has been considered as the dependent variable in this study. However, this study has finalized microfinance sector of Pakistan to testify the relationship between variables mentioned above. The major emphasis in this study has been on assessing the relationship between capital adequacy ratio, asset quality, management efficiency, earning ability and liquidity (independent variables) and return on assets (dependent variable) in microfinance sector in Pakistan. Secondary sources of data (annual financial statements) have been used for data collection regarding variables of this study from the period of 2015 – 2019. A sample size of 50 observations has been finalized to represent the entire population. Collected data has then been analyzed through statistical instruments such as correlation and regression by using Strata. Based on the findings, it has been concluded that capital adequacy ratio, asset quality, management efficiency, earning ability and liquidity have significant negative impact on return on assets in microfinance sector of Pakistan.