THE EFFECT OF INTERNAL FINANCIAL FACTORS ON THE PERFORMANCE OF COMMERCIAL BANKS IN DEVELOPING COUNTRIES

Hazrat Bilal; Lala Rukh; Qamar Afaq Qureshi

Hazrat Bilal Center for Management and Commerce, University of Swat, KP, Pakistan
Lala Rukh Center for Management and Commerce, University of Swat, KP, Pakistan
Qamar Afaq Qureshi Department of Public Administration, Gomal University, D. I. Khan

Keywords: Internal Financial Factors, Profitability, Return on Assets, Commercial Banks Performance

Abstract

This research study examined the effect of internal financial factors including capital, loans, deposits, fixed assets, investments and liabilities on the profitability of commercial banks of Pakistan for a period of six years from 2008 to 2013. Correlation and Regression analysis were applied to examine the effect of independent variables on dependent variable. The results revealed that higher level of capital contributes towards bank's profitability but its impact is insignificant while there is a significant positive relationship between deposits, investment and bank’s profitability, which was measured through Return on Assets. On the other hand loans, fixed assets and liabilities have a negative impact on the profitability of commercial banks of Pakistan.