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

Javaid, Shahid Hussain (2021): Non-interest Income and Profitability: A Case of Pakistani Banks.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: non- interest income, bank profitability ARDL, financial stability
• Subjects: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General; G - Financial Economics > G1 - General Financial Markets > G10 - General; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

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