EXPLORING THE IMPACT OF FINANCIAL LEVERAGE AND ASSET EFFICIENCY ON SUSTAINABLE GROWTH RATE: MEDIATING ROLE OF FINANCIAL RISK MANAGEMENT ON MCB BANK LIMITED IN PAKISTAN

Abstract

The purpose ot the study is to investigate the impact of financial leverage & asset efficiency sustainable growth rate of MCB Bank Limited, mediating role of financial risk management encompassing credit risk, liquidity risk and operational risk. The data is based on analysis ofannual financial time series data ofMCB Bank Limited from 2008 to 2022.The sustainable growth rate, assessed through return on equity, serves as the dependent variable, while financial leverage and asset efficiency are treated as independent variables. The multiple regression analysis indicate a negative impact offinancial leverage on the sustainable growth rate, suggesting that an excessive reliance on financial leverage can impede MCB bank’s ability to generate the necessary earnings to sustain future growth rate. Conversely, the study reveals an affirmative influence of both asset efficiency and effective financial risk management on the sustainable growth rate of MCB Bank Limited through regression model and mediation analysis in compliance with Baron and Kenny (1986). These factors contribute positively to the bank’s growth and stability. Based on these conclusions, it is crucial for MCB Bank Limited to exercise prudent control over its financial leverage in order to thrive in the market.