DETERMINING THE BEST CORPORATE FINANCING OPTION FOR THE PROFITABILITY OF BANK (A STUDY ON MCB BANK LTD)

Abstract

Purpose: The main puipose of the research is to determine the Best corporate financing option for the profitability of the bank. To conduct this study the effect of Equity, Long term obligation and Short term obligation on the Profitability, Earnings per share and Return on Assets is analyzed. Methodology: The target population for the research is MCB Bank Ltd. This research is quantitative in nature. In this study secondary data is used to perform analysis. The secondary data is collected from official website of MCB Bank Ltd. As this study is quantitative therefore the numerical data is collected from the financial statements of one of the commercial bank MCB Bank Ltd operating in Pakistan from the period of 2000 to 2015. To analyze the data, Regression, ANOVA and Correlation tests were applied. The reason to select one bank is the access to the required data and limited time of the study. Findings: The detailed analysis of financial data of MCB Bank Ltd shows that there is not any significant connection between' long term debt and Profit after tax; long term debt and' earnings per share of the bank. However, Equity and short term debt have a significant impact on profit after tax, earnings per share and return on assets of the bank. Practical Implications: This study will not only help the commercial bank to conduct the cost benefit analysis of their investment decision so that they can realize the maximum return but will also help to analyze the best financing option for bank with respect to the ground realties of Pakistan’s financial sector and economy.