Abstract:
The objective of the study was to examine the effect of credit risk on financial performance of banks in Pakistan. For the purpose secondary data collected from top 5 commercial banks for a 10 year period (2008-2017) from annual reports of banks. The data were analyzed using a descriptive statics and time series data regression model and the result showed that credit risk measures: Capital adequacy ratio (CAR) non-performing loan ratio (NPLR), Loan to deposit ratio (LTDR) and size of bank have a significant effect on the financial performance of banks in Pakistan. The study suggested a need for enhancing credit risk management to maintain the prevailing financial performance of banks in Pakistan
