IMPACT OF MONETARY POLICY ON FINANCIAL PERFORMANCE; EVIDENCE FROM THE BANKING SECTOR OF PARIS FAN

Abstract

The purpose of this study is to enlighten the impact of monetary policy on the financial performance banking sector. The secondary time series data was gathered from 2000-2023 from the financial data stream websites. The sample consists oftwenty Conventional Banks registered on the Pakistan Stock Exchange. The simple linear regression technique was used to test the cause and-effect relationship between monetary policy and financial performance. Furthermore, the moderating role of firm size is also investigated between exogenous and endogenous variables. The findings suggest that there is a positive significant impact of monetary policy on financial performance. However, the size ofthe firm moderates the relationship between monetary policy and financial performance. The fluctuation in monetary policy rate is managed effectively by the strategic decision-making of Corporate Governance of conventional banks. The larger banks can earn more profit as compare to small banks.