Determinants of the firm value of listed banks in Pakistan: A panel data approach

Tahir Saeed Jagirani (), Lim Chee Chee () and Zunarni Binti Kosim ()

Asian Economic and Financial Review, 2023, vol. 13, issue 4, 241-250

Abstract: The aim of this study is to examine the determinants of firm value for listed banks in Pakistan. This study is based on secondary data extracted from the annual reports of listed banks in Pakistan with quarterly data comprising 512 sample observations from 2015 to 2021. Panel data estimation techniques were employed for the analysis. The findings of the study revealed that all determinants influence firm value except liquid assets to total assets (LATA). The stock price of listed banks in Pakistan is continuously falling, which causes the stock's value to change from being overpriced to being undervalued. Nonperforming loans (NPLs) and the cost-to-income ratio (CIR) reduce firm value, while increases in the net interest margin (NIM) and capital adequacy ratio (CAR) enhance firm value. Further, NPLs and the CIR have a negative relationship with firm value. However, CAR, LATA, and NIM have positive associations with the firm value. The study concluded that the average capital adequacy ratio of listed banks in Pakistan is 10.5%, which is higher than the minimum requirement set by the regulator. This indicates that CAR helps to increase firm value in listed banks in Pakistan. The study will be useful to policymakers, regulators, and the banking sector in evaluating the major determinants that affect firm value.

Keywords: Capital adequacy ratio; Cost-to-income ratio; Firm value; Long-term assets to total assets; Net interest margin; Nonperforming loans. (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://archive.aessweb.com/index.php/5002/article/view/4764/7573 (application/pdf)
https://archive.aessweb.com/index.php/5002/article/view/4764/7755 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:asi:aeafrj:v:13:y:2023:i:4:p:241-250:id:4764

Access Statistics for this article

More articles in Asian Economic and Financial Review from Asian Economic and Social Society
Bibliographic data for series maintained by Robert Allen ().