The Impact of Risk Management Factors on Banks Performance of Pakistan

Authors

  • Qasim bin Zahid Ms Scolar, Department of Management Studies, Bahria University, Islamabad
  • Muhammad Khalid Sohail Faculty Member, Department of Management Studies, Bahria University, Islamabad
  • Abdul Raheman Faculty member, Faculty of Management Sciences, Islamic International University, Islamabad
  • Muzammal Ilyas Sindhu Faculty member, Department of Management Studies, Bahria University, Islamabad

DOI:

https://doi.org/10.51239/nrjss.v13i4.221

Keywords:

Risk, Banks, Credit, Operational, ROA, ROE, BASEL, Tobin’s Q

Abstract

Risks usually affect the overall profitability/financial performance of any corporate sector. Various techniques of risk mitigation are important in dealing with downturns in the Pakistani economy regarding pandemic, unstable political situations in Pakistan, and different time-to-time policies of state banks regulation which consist of BASEL amendments. Data of fifteen banks had been selected for the period 2012-2018 and analyzed by using certain statistical techniques which are descriptive statistics, correlation, anal regression analysis. As from analysis, we found that Credit risk and Liquidity risk has a positive significant effect on the financial performance of the bank, which is measured by ROA, ROE, Tobin’s Q. Further, one of the risk factors which is operational risk diverts from a hypothesis which shows significant negative effect on the financial outcome of Pakistani banks. The results of this study will help the management of banks to find better solutions to enhance performance. Further, the policy implication of this study advises that banks should follow BASEL regulations and risk disclosures strictly to cope with the market.

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Published

2020-12-25

Issue

Vol. 13 No. 4 (2020): October-December

Section

Articles