Impact of bank capital regulation and GDP growth on profitability in commercial small and medium banks: empirical study

Shazaib Butt and Stéphane Strtak

International Journal of Entrepreneurship and Small Business, 2020, vol. 39, issue 3, 383-394

Abstract: We empirically examine the impact of Basel compliance and economic activity on the profitability of commercial small and medium banks of Pakistan during and post global financial crises of 2007–2008. Panel data setting is implemented using annual data from 25 commercial banks during the period 2007 to 2014. The data tested GDP growth rate and bank specific risk variables. We find strong evidence that market risk, non-performing loans, NPLs and GDP growth rate have significant impact on the profitability of small and medium commercial banks.

Keywords: capital adequacy ratio; CAR; Basel capital; commercial banks; NPLs; credit risk; market risk; operational risk. (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijesbu:v:39:y:2020:i:3:p:383-394

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