PROFITABILITY OF PAKISTAN’S BANKING SECTOR AND COVID-19

Abstract

Purpose: To investigate the impact COVID-19 pandemic has had on the profitability of the banking sector of Pakistan. Methodology & Design: The analysis was done suing the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration. Data was available on the website of State Bank of Pakistan and Pakistan Bureau of Statistics. Findings: It has been found that rather than having a negative impact, COVID-19 seems to have had a positive impact on the profitability of the banking sector of Pakistan. This positive impact maybe linked to the policies and programmes started by the government and the regulator to stimulate the economy in the face ofthe COVID-19 pandemic. Limitations Policy decision data needs to be incorporated so that exact effect of each policy can be judged and accurately investigated. This will help the researchers better deduce which policy measures were helpful. Recommendations Although ARDL approach is robust with a small dataset, it is recommended to use a large dataset to more accurately come to deduce the relationships between different variables.