Non-interest Income and Profitability: A Case of Pakistani Banks

Shahid Javaid

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the impact of non-interest income on bank performance for Pakistan. The study used Auto regressive distributed lag (ARDL) method on quarterly data from 2011 to2021 for this purpose. The results show that decrease in non-interest income decreases the profitability of Pakistani banks. Furthermore, analyzing the components of non-interest income, it is found that decrease in income from dividend and foreign currency led to this decrease in profitability whereas fees & commission showed negative impact on performance. This suggests that commercial banks may increase the foreign currency earnings and dividends to enhance their profitability. This study may be helpful for commercial bankers, State bank of Pakistan and other financial institutions to build up non-interest income framework and policies.

Keywords: non- interest income; bank profitability ARDL; financial stability (search for similar items in EconPapers)
JEL-codes: E40 G10 G21 (search for similar items in EconPapers)
Date: 2021, Revised 2022
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:117425

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