Abstract:
Introduction: In Pakistan, the banking performance is influenced by deregulation, financial
modernization and technological improvement. Financial sector is the back bone of the
sustainable economic growth. So it is very important to assess the negative shocks in order to
maintain the financial stability in Pakistan.
Literature Review: The chapter examines the previously conducted researches on the topic of
profitability Determinants in Pakistani banks. After reviewing the literature following variables
have been identified size, capital, Loan, deposits, GDP&inflation. Local as well as internal
researches have been included in order to broaden the scope of literature.
Research Methodology: The research follows a Quantitative research design while the data for
this research is collected from Secondary sources. This study is conducted to find out the main
determinants of banks profitability considering the bank specific variables i.e.SIZE, CAPITAL,
LOAN, DEPOSITS, GDP, and INFLATION.
Conclusion: The analysis has been conducted on 6 banks on the basis of availability of data
over the period 2008-2012. The findings of this study indicated that all internal variables, except
CAPITAL, have significant relationship with profitability of banks in Pakistan. The
recommendations suggested include increasing the loan to deposit ratio, Increase in size and
Reliability on deposits for funding.
