THE IMPACT OF REVENUE DIVERSIFICATION ON BANK' S PROFITABILITY

Abstract

Purpose: This research is conducted with the aim to understand the impact of revenue diversification on bank’s profitability in banking industry of Pakistan. The research wants to identify each variable of revenue diversification and its implication with respect to selected industry. The research has been conducted to understand the importance of revenue diversification in banking operations. Research Methodology: The nature of this research is exploratory as it is based on annual reports of the banks and previous studies. In order to critically evaluate the result, regression model is used. The research used Panel data therefore Eviews models are used to find the results. First this research used Unit Root test to check the stationary of the variables, then Descriptive statistic are used to check whether the data is normally distributed or not and at last Panel least square method is used to analyze the impact of independent variables on dependent variable. Findings of the research: In this research panel, least square method is used to analyze the impact of revenue diversification and bank’s profitability of selected banks. Different hypothesis are created regarding each variable, when the research identifies the overall result than result of hypothesizes are discussed according to significance value i.e. 5%. Practical Implication: diversification is considered to be very important in any industry and it is also beneficial for the banking industry. Because of the advancement, competitive environment and merger with noncore business banks are considering diversification in different areas of operation.