Financial Analysis: A comparative study of financial performance of specialized bank and conventional bank of Pakistan

Abstract

In this study, a comparison has been made between the financial performance of the conventional bank and specialized banks operating in Pakistan. With the continuously changing economic dynamics it is very important for the banks operating in Pakistan to maintain a strong financial base. For this purpose, the secondary data was collected of the banks: conventional banks (National Bank of Pakistan) and industry specific bank (Zarai Taraqiati Bank) for the time return on period 2007-2017. For this study, CAMEL approach is used to evaluate the financial performance of the banks. This model uses five variables: capital adequacy, earning, liquidity, asset quality, management efficiency. Return on asset (ROA) is used as the dependent variable and the parameters under CAMEL model are used as the independent variables. The statistical tool Eviews is used to generate the descriptive, correlation and regression analysis. The results showed that capital adequacy, earnings, are statistically significant and positively correlated for both the banks. While management efficiency is found to be significant for conventional banks only. In this study, liquidity has shown no significant relationship. Asset quality is significant but positively correlated to the industry specific banks while negatively correlated with the conventional bank.