Managing the Profitability Performance of the Banks: Exploring the Antecedents through Case Examination of MCB Bank

Maria Shaikh,Ghazala Benghal,Nadeem Juman Shah,Haseeb Haleem Shaikh,Sumra Shaikh

doi:10.33166/acdmhr.2020.03.004

Abstract

Debt financing has been used as an instrument of filling the budget deficits both in the private and public sector. Over the years it has gained popularity and it is now a common phenomenon to find in the finical reports of most companies’ extent of debt. The contribution Advances and deposits are crucial for all banks. This research is aimed to judge impact of debt, investments, Advances, Equity, Taxes and deposits on profitability of banks. This research is aimed at identify impact of major factors on profitability of Muslim commercial bank of Pakistan (MCB) covering the period from 2011 to 2016 Secondary data was used from annual financial reports and from the website of Muslim commercial bank of Pakistan (MCB) and state bank of Pakistan. This research study is descriptive and correlative in nature. The data then analysed through multiple regression analysis in electronic views (e-views) in order to measure if there exists any relationship between bank profitability and leverage. Debt, Advances, Investment Equity and Taxes selected as independent variables and profitability as dependent variable in order to examine the effects of debt, Advances, Equity and Taxes on firm performance. The findings of the research are significant as per hypothetical relationship. The study revealed that bank advances, investments and equity has a positive effect on profitability whereas Taxes affects negatively to the profitability of MCB. The regression results show that Advances, Investments and equity which is independent variable is significant variable of profitability the dependent variable. Its significant at.000 level of significance as the p-value shows.

Highlights

An entity which is engaged in the exchange of money and provides all monetary solutions, whose major activity is lending and receiving deposits is called bank
Lack of studies on debt financing and profitability of banks and the concentration of studies on capital structure of banks have motivated my study, this made me to do study on impact of debt financing on profitability of banks, and we will analyze the impacts of debt financing on the profitability of Muslim commercial bank of Pakistan
Obamuyi (2013) conducted quantitative research and the results show that there is a positive relationship between short term debt and profitability of banks, to the total results, interest www.acdmhr.theiaer.org coverage ratio and size of the banks

Summary

Introduction

An entity which is engaged in the exchange of money and provides all monetary solutions, whose major activity is lending and receiving deposits is called bank. Bank plays an important role in the growth and development of the economic sector of any nation (Allen et al, 2015). Organization cannot achieve their goals without satisfying their customers and employees satisfying all customers is their first priority (Shaikh, Shaikh & Shaikh, 2019a). Therein, debt financing comprises of main sources of external funding for most banks. It provides a mechanism of filling financing deficits for banks that have insufficient financial resources. Lack of studies on debt financing and profitability of banks and the concentration of studies on capital structure of banks have motivated my study, this made me to do study on impact of debt financing on profitability of banks, and we will analyze the impacts of debt financing on the profitability of Muslim commercial bank of Pakistan

Objectives

Methods

Findings

Conclusion