The impact of Bank Specific and Macroeconomic Indicators on the Profitability of Commercial banks

Riaz, Samina
Mehar, Ayub
Publication date: 
JEL codes: 
G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages.
This study has been carried out with the aim to investigate the impact of the bank specific variables: Asset size , Credit Risk , Total deposits to total assets ratio,and macroeconomic indicator: interest rate( Discount rate) on the profitability measures, ROE and ROA of commercial banks in Pakist an during the period of2006-2010. There are two measures of profitability Return on equity(ROE) & Return on assets (ROA). All 32 commercial banks were selected and by using regression the results show that there is a significant impact of bank specific variables( asset size, total deposits to total assets, credit risk )and macroeconomic indicator (interest rate) on ROE and credit risk and interest rate have also a significant impact on ROA.
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