Abstract:
Purpose: The objective of this research study is to analyze the profitability determinants
of Pakistani commercial banks over the period from 2008 to 2012.
Methodology/sample: There are several external and internal factors that have effect
on banks’ profitability/return on assets. But in this research study only internal factors
i.e. size of bank, deposits, capital adequacy, liquidity and cost efficiency were taken.
Descriptive statistics such as mean, median, maximum, minimum, and standard
deviation were used to analyze the impact. Other statistical techniques such as
correlation, regression analysis and natural logarithm of total assets were used.
Findings The findings of this research study are that the result shows that capital
adequacy, liquidity and cost efficiency are those variables that are decided the Pakistani
commercial banks’ profitability. On the other side variables such as size of banks and
deposits do not impact on the profitability of commercial banks operating in Pakistan.
Practical Implications The results of this research are useful for the banking industry.
It has specifically identified the factors which are important for the profitability of the
banks.
