Impact of COVID-19 on Banking Sector Performance and Efficiency

Abstract

This study aims to interrogate the impact of COVID-19 on the performance and efficiency of the firms in the banking sector of Pakistan. It was hypothesized in the literature that banks those were operationalized during lockdown were affected by COVID-19. Banking sector of Pakistan gives high percentage and contribution in the economy of Pakistan. Banking sectors of Pakistan are identified with the use of low leverage level. Based on this evidence, it is expected that COVID- 19 has a negative impact on the performance of the banks. The results are based on the secondary data that was extracted from the financial statements of 24 banks in Pakistan. This study has employed the statistical tool of Stata to explore the relationship between proxies affected by COVID-19 such as liquidity ratio, profitability, overhead and tax and performance of the firms. It has been indicated by this study at the end that COVID-19 has a negative impact on performance and efficiency of banks. The negative sign indicates the decrease in level of performance of the banks. The findings of this study help the investors and researchers to better understand the effect of COVID-19 factors on the performance and efficiency of the banks