Abstract
The regulatory outcomes and how the various banks are operating in the economy have their significant impact on the overall banking system and in determining the firmness of financial structure. In the current study analysis, we have conducted this work to examine the relationship between the financial market development, bank risks with key indicators and their ultimate impact on financial performance in the banking sector of Pakistan from 2003 to 2011. For this purpose, panel data analysis has been performed and both the firm specific and country specific factors have been considered. The bank risk is analyzed in two dimensions of bank risk: first is capitalization ratio that measures the total amount of debt in company’s capital structure (banks behavior) and second one is TEIR-I capital ratio which is the proxy used to compare the present level of risk based assets in firm’s balance sheet. A conceptual model has been developed for this purpose and key findings being made. Stock market development and banking sector development is used to measure the financial market development of the economy. Core findings of the study stated that there exists significant relationship between financial market development in banking sector and financial performance with key indicators.
Highlights
In this paper, we are analyzing the relation between the developments of financial markets in the economy withHow to cite this paper: Kamran, H.W., Chaudhry, N., Murtaza, M.M., Zafar, N., Yousaf, A. and Nazish, H. (2016) Financial Market Development, Bank Risk with Key Indicators and Their Impact on Financial Performance: A Study from Pakistan
The regulatory outcomes and how the various banks are operating in the economy have their significant impact on the overall banking system and in determining the firmness of financial structure
The key question of whether financial market development leads to the lower level of bank capitalization ratios or it has an adverse effect on capitalization ratio of the banks, keeping other things constant is still under debate [10]
Summary
We are analyzing the relation between the developments of financial markets in the economy with. (2016) Financial Market Development, Bank Risk with Key Indicators and Their Impact on Financial Performance: A Study from Pakistan. We have analyzed the relationship between key factors of banking risk; the capitalization ratio, diversification in the revenue with progression in financial markets. Our aim is to conduct the said analysis through longitudinal data by focusing on the impact of evaluation of progression in financial markets with respect to banking sector behavior. Several research studies have been conducted which have emphasized on financial market development by focusing on cost benefit spectrum. For promoting the domestic investment opportunities, financial market development is contemplation to the growth of the economy as it provides with the better access to finance. The regulatory outcomes and how the various banks are operating in the economy have their significant impact on the overall banking system and in determining the firmness of financial structure
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