THE IMPACT OF FINANCIAL RISK ON PERFORMANCE OF BANKS IN PAKISTAN

Abstract

Purpose The research is generally conducted to understand the impact of financial risks on performance of commercial banks in Pakistan. The foremost aim and purpose of this research is to find out the impact of financial risks and the how it relates with the performance of the banks and leads the banks toward the profit or loss. Methodology The nature of the research is the regression study, and for data of research organized secondary sources arc used like, published data and the annual report of the selected banks of Pakistan. Many other statistical tools have also been used/applied in this regard i.e.: SPSS, Correlation, Regression, ANOVA and Coefficient. Findings While conducting this research certain finding revealed which shows that the credit risk has an adverse impact on Return on Assets but have no impact on Return on Equity. While on the other hand liquidity risk has no impact on both Return on Assets and Return on Equity and when considering operational risk it has an impact on Return on Assets and Return on Equity. Practical implications • This research is thoroughly applicable on entire risks management policies makers and the top management of the commercial banks who have (lie authorities to manage and improved the performance of the banking sector. Moreover the research is very useful for future researcher to improve the hidden phenomena in this particular area.