Impact of Bank-Specific, Corporate Governance and Environmental Factors on Bank Efficiency and Profitability in Pakistan

Authors

  • Hafiz Muhammad Athar Ph.D. Scholar, Faculty of Management Sciences, International Islamic University (IIU), Islamabad, Pakistan
  • Sumayya Chughtai Assistant Professor, Faculty of Management Sciences, International Islamic University (IIU), Islamabad, Pakistan.

DOI:

https://doi.org/10.34260/jaebs.525

Keywords:

Too big to fail paradigm, Critical mass/Tokenism theory, CSR index, Data envelopment analysis (DEA), Return on Assets (ROA)

Abstract

The study aims to investigate the impact of bank-specific, board structure, gender diversity, and environmental factors on bank efficiency and profitability in Pakistan by taking a sample of seventeen commercial banks for the period 2013-2018. Data envelopment analysis (DEA) and return on assets (ROA) are used as a proxy to measure bank efficiency and profitability. Panel estimation techniques and Generalized Method of Moments (GMM) are used to conceptualize the research framework and to test the hypotheses. The findings indicate a negative relationship of non-performing loans, advances, level of involvement of women into other committees, and CSR index with ROA; while more presence of women on board reveals a positive and significant impact on ROA that is consistent with critical mass theory. However, CEO duality shed a positive impact on technical efficiency; while bank size signifies an inverse relationship with ROA and technical efficiency. Moreover, deposit influences ROA positively; while board size finds a positive and significant relationship with ROA and technical efficiency.  The findings are important for various stakeholders as they can efficiently take their decision-making to better understand the factors influence bank performance. This study recommends future researchers do the same research by inculcating a larger sample size.

Downloads

Download data is not yet available.

Metrics

Metrics Loading ...

Published

2021-06-30

How to Cite

Athar, H. M. ., & Chughtai, S. . (2021). Impact of Bank-Specific, Corporate Governance and Environmental Factors on Bank Efficiency and Profitability in Pakistan. Journal of Applied Economics and Business Studies, 5(2), 69-86. https://doi.org/10.34260/jaebs.525

Issue

Section

Articles