Impact of Liquidity on Profitability: A Comprehensive Case of Pakistan¡¯s Private Banking Sector
Muhammad Shaukat Malik,
Mustabsar Awais and
Aisha Khursheed
International Journal of Economics and Finance, 2016, vol. 8, issue 3, 69-74
Abstract:
The subject of liquidity-profitability interchange is well recognized in the literature. This study was conducted to inspect the trade-off between liquidity and profitability in private sector banks of Pakistan. The study was carried on twenty two private sector banks registered under State bank of Pakistan during the time period of 2009-2013. Three models were specified and estimated using Ordinary Least Squares (OLS) technique. The empirical results revealed that there is a statistically significant relationship between bank liquidity measures and return on assets. However, when return on equity and return on investment was used as proxy for profitability, the relationship became statistically insignificant. It has been recommended that the banks should assess and restructure their strategies for managing liquidity. This will not only improve yields on shareholders equity but will also enhance the use of the assets of the bank.
Keywords: liquidity; profitability; trade-off; banks; optimal liquidity (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
http://ccsenet.org/journal/index.php/ijef/article/view/55913/30777 (application/pdf)
http://ccsenet.org/journal/index.php/ijef/article/view/55913 (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:ibn:ijefaa:v:8:y:2016:i:3:p:69-74
Access Statistics for this article
More articles in International Journal of Economics and Finance from Canadian Center of Science and Education Contact information at EDIRC.
Bibliographic data for series maintained by Canadian Center of Science and Education ().