The Impact of Prudential Regulations on the Performance of Selected Commercial Banks

Abstract

Commercial banks are financial institutions that provide a range of services to businesses, consumers and non-business institutions. These services include consumer & business loans, checking services, credit cards and savings accounts. Prudential Regulations are instructions set by the State Bank of Pakistan which are to followed by banks while providing any facility, whether fund-based or non fund-based, to their clients. There are different categories of Prudential Regulations, which include Prudential Regulations for Agriculture Financing, Corporate/Commercial Banking, SME Financing, Consumer Financing, and Microfinance Banks/Institutions. Within the Corporate/Commercial Banking category is a further sub-category of Risk Management (R). This research studies the impact of the Prudential Regulations on the performance of commercial banks, with a focus on Risk Management. The findings confirm that there is no direct impact of these regulations on the performance commercial banks in terms of profitability, no. of clients and market share.