Banking Industry Of Pakistan Research Articles

The Moderating Role of Education in Determining Affective Form of Organizational Commitment in an Emerging Economy

Employee’s organizational commitment has garnered considerable recognition in both academic and managerial fraternity due to its empirical significant correlation with favorable organizational results. This research examines the influence of four significant organizational factors, including rewards, training, communication and teamwork on employee’s affective form of commitment in the banking industry of Lahore, Pakistan. Additionally, it explores the moderating role of educational levels in the association amongst affective form of commitment and organizational variables, proposing that this association is highly significant for workers with higher levels of education in comparison to workers with lower levels. 200 employees presently working in the banking industry of Pakistan were examined using convenience sampling method and regression examination was performed. Findings suggested that all four organizational variables had a significant and favorable association with affective form of commitment. For levels of education as a moderating variable, the results provided support for the hypothesized interaction between affective commitment and organizational variables, besides teamwork. The study concluded that workers with high education degrees exhibit greater responsiveness to positive organizational initiatives, as evidenced by differences in affective commitment among various education groups. The results suggest that organizations must recognize the significance of these four factors in creating a conducive work environment for their employees, thereby fostering their complete commitment for achieving organizational success. Consequently, it suggests that practitioners should tailor strategies to cultivate a strongly dedicated labor pool, considering distinctive characteristics.

Perceptions of politics and knowledge sharing: Moderating role of Islamic work ethic in the Islamic banking industry of Pakistan

Knowledge is the most critical source for sustainable competitive advantage in an organization. Organizations must therefore focus on creating a culture for Knowledge Sharing. However, politics or political work environment is an inevitable outcome where people interact and communicate on a daily basis. Politics discourage Knowledge Sharing and its related efforts in the organization. However, Islamic Work Ethic can remove negativity and strengthen Knowledge Sharing behaviors in the organization. This research focused on the moderating role of Islamic Work Ethic between Perceptions of Politics and Knowledge Sharing behaviors.The data was gathered using a structured questionnaire from the Banking Industry in Karachi, Pakistan using unrestricted non-probability convenience sampling technique. Hypotheses was tested using Structural Equation Modelling in SMART-PLS software. It was found that Perceptions of Politics reduces Knowledge Sharing Behaviors while Islamic Work Ethic Increase Knowledge Sharing Behaviors. Islamic Work Ethic moderates the relationship between Perceptions of Politics and Knowledge Sharing Behaviors. Employees religious orientations affect their work-related outcomes and behaviors. Islamic Banks have been mostly neglected as they have recently emerged as an important part of the economy therefore this study contributes to the literature by collaborating Islamic Work Ethic, Perceptions of Politics and Knowledge Sharing.

The Impact of Technostress on Rumination in the Banking Sector of Pakistan

Although Pakistan's banking industry is leading the way in digital transformation, a hidden techno-stress is associated with this advancement. Our research, created with your business goals in mind, looks at how work-life conflict, information overload, and other tech-related worries affect the dedication and well-being of employees. We look at how common techno-stress is and how it relates to depressive thoughts. We aim to provide workable solutions that lessen technology-related stress while promoting worker well-being and corporate efficiency. We examine the effects of various types of rumination on productivity using survey data. We suggest strategies that reduce harmful tech stresses and encourage healthy detachment to increase employee happiness and organizational efficiency. Using a strict approach, we examine the intricate links between technostress and associated aspects. This study highlights the need for context-specific solutions for Pakistan's banking industry and provides insightful advice on fostering a positive workplace culture that grows with technology.

Factors Influencing the Attitude and Behavioral Intention of Auditors for Use of Forensic Accounting Services: A Study on Banking Industry of Pakistan

The increase in fraud action against financial reports makes many people uneasy and considering to use Forensic Accounting Services (FAS) to prevent and detect fraud. The Theory of Reasoned Action (TRA), formulated by Fishbein and Ajzen, is pivotal in elucidating the determinants of specific professional behaviors, especially in sectors where compliance and ethical standards are strictly monitored like auditing. This study aimed to analyze the factors affecting the Behavioral Intention of Auditors to Use Forensic Accounting Services in the Banking Industry of Pakistan with the mediating effect of Attitude of the Auditors in the Banking Industry. This research used the survey method through a questionnaire and primary data, which was obtained from the population of heads of division and internal auditor staff in public and private banks operating in Karachi using the Snowball Sampling Technique. The researcher has used Smart PLS for statistical testing. Results of the study have found that among the variables, i.e., The Perceived Benefits do not affect the Attitudes towards Forensic Accounting Services but it directly affects the behavioral intention, although the Perceived Risk affects the attitude and behavioral intention of the auditors. Additionally, the study also finds that the other factors Government Pressure, Internal Control Systems, Stakeholder Pressure, and Time budget Pressure affect the attitude of auditors towards FAS as well as make the direct relationship with the behavioral Intention to use Forensic Accounting Services. This research, conducted within the banking sector of Pakistan, offers several practical implications for managers and policymakers aiming to enhance the adoption and effective use of forensic accounting services, understanding the dynamics between attitudes towards forensic accounting services and behavioral intentions to use these services.

Digital Transformation and Work Stress Impact on Employee Engagement in the Private Banking Sector

Digital transformation has been a significant topic of discussion in Pakistan's banking industry. High levels of stress in the workplace might be caused by the introduction of various uncertainties due to technological advancements. Work-related stress can directly impact employees' engagement in their work, jeopardizing the organization's effectiveness. The study took place in a private bank in Indonesia, involving 448 participants located in Jakarta. These responders have witnessed significant technological advancements during the past year. This work utilizes a quantitative approach, specifically employing the Structural Equation Modelling Partial Least Squares (SEM PLS) method. Furthermore, 25 indicators from several worldwide publications are utilized. The study's findings demonstrated that the 25 indicators were able to form each of the latent variables. The research indicated that workplace stress had a negative impact on employee engagement. Therefore, it was suggested to conduct further research on the issues identified in the findings.

Analysing the impact of digital technology diffusion on the efficiency and convergence process of the commercial banking industry of Pakistan

In a dynamic financial ecosystem, digitalisation is supporting banks in revamping their business processes to be more efficient, reducing costs, coping with customers’ evolving demands, and keeping them abreast of market competition. This two-stage research aims to investigate three issues in Pakistan’s banking industry from 2006 to 2020: (i) banking efficiency; (ii) the impact of digitalisation on banking efficiency; and (iii) banking efficiency’s absolute and conditional convergence. In our first-stage analysis, bootstrap data envelopment analysis has been applied, which exhibits bias-corrected overall, pure, and scale efficiencies of 74, 77, and 96%, respectively. In the second-stage analysis, we executed Tobit and two-step dynamic panel data system generalised method of moments (DPDSYS-GMM) models, and the results uncover that digitalisation has a positive influence on banking efficiency. Findings confirm that return on assets, bank size, interest rate, and gross domestic product growth rate have a positive association with banking efficiency. Our research reveals that state-controlled banks outperform their private sector and special-purpose counterparts. Our DPDSYS-GMM findings validate β and σ-convergence, implying that initially, low-efficient banks caught up (converged) to the more efficient opponents, reducing cross-sectional efficiency dispersion and attaining common equilibrium. The findings of banking efficiency conditional β-convergence assert that the adoption of digital technology has played a critical role in the convergence process and that digitalisation has acted as a catalyst for less efficient banks to catch up significantly faster to their more efficient rivals. This study displays digitalisation’s disruptive influence on the overall transformation of Pakistan’s banking system in the modern era, resulting in significant efficiency gains.

The Causal Linkages between Market Power and Cost Efficiency: Testing Quiet Life Hypothesis for the Banking Industry

This study aims to test the quiet life hypothesis considering the impact of market power on cost efficiency in Pakistani banks where managers of the banking industry slacken their efforts to enjoy a ‘quiet life’ due to market power and are not focused on the cost efficiency of their banks. Thus, banks with high market power are relatively less focused on the efficient allocation of resources, resulting in a loss of consumer surplus and efficiency. We take panel data for a sample of 25 commercial banks throughout 2006-2019. Our findings suggest Uni-directional causality running from cost efficiency towards market power in the case of Pakistan. In addition, to control for endogeneity, we adopt a dynamic two-step system GMM approach to model the relationship between market power and cost efficiency. Our findings suggest significantly negative effects of cost efficiency over market power, disproving the presence of quiet life in the case of Pakistan. This study provides substantial theoretical contributions in the form of the Quiet life hypothesis and welfare performance of banks. However, to the best of our knowledge, the causal linkages and the effects of market power on cost efficiency or vice versa are not documented for the banking industry of Pakistan.

CSR Disclosure and Bank’s Financial Performance Nexus: Evidence from Pakistan.

Present research intends to evaluate the nexus among the corporate social responsibility (CSR) disclosure and financial effectiveness of banking industry in Pakistan. This investigation applies a quantitative research approach using panel data from a sample of Pakistan’s commercial banking institutions over timeframe limited from 2009 to 2020. The outcomes of mixed effect model visualize that there is inverse significant association among CSR disclosure ROE. Whereas no statistically significant linked in the context of short-term financial performance, by using a proxy of ROA. The results suggesting that the focus on CSR events and initiatives may have a detrimental effect on financial effectiveness. It is generally acknowledged that CSR offers numerous non-financial benefits, such as enhancing social media campaigns and luring ethical investors from both domestic and foreign markets. In developing countries context (i.e., Pakistan), we can conclude that the “cost of the CSR initiatives” and “shift of focus view” can affect the performance of banking industry. The lack of a positive correlation among corporate social responsibility (CSR) and financial performance in the Pakistani financial services sector can be attributed to a lack of interest and engagement in socially conscious investing. These findings indicate that the adoption of socially responsible investment has not gained significant cultural traction in Pakistan. The results emphasize the importance of banks, regulators, and stakeholders reassessing the balance between social responsibility and financial performance, considering the possible negative consequences of revealing CSR initiatives.

Influence of Digital Bank Services on the Financial Performance of the Commercial Banks

It is anticipated that the adoption of digitalization in Pakistan's banking industry will have an impact on how banks formulate financial services and products as well as how well these banks operate. This paper attempted to analyse the impact of the digital banking on Pakistani commercial banks' financial performance in order to achieve this goal. Quantitative research approach was utilized. Commercial banks were the target population of this research. There were 200 responders from Pakistani commercial banks in the sample. The study employed multiple regression analysis to examine how digital banking affects financial performance. According to this research, Pakistan's commercial banks' growing profitability was mostly because of an increase in digital customer deposits made through digital banking platforms. The research findings indicate that there was an rising trend in the ratio of digital bank transactions to total assets over the chosen study period. The overall percentage of assets while growing due to a further increase in information technology expenses, fees, and commissions. The research findings indicated that an increase in online banking transactions was favourably and strongly correlated with profitability. To boost digital banking and boost commercial banks' financial performance, the report advises bank management to improve it.

The Impact of Macroeconomic Factors on the Banking Sector’s Profitability in Pakistan

This research aims to study and analyze the impact of macroeconomic factor on the banking sector’s profitability in Pakistan. Banking sector of Pakistan is the backbone of its economy. The study explains the importance of banking industry of Pakistan and its achievements and evolvement throughout the years. The objective of the study is to examine the macroeconomic factors’ influence on the banking sector in Pakistan and to investigate that whether the profitability is only determined by the bank-specific internal factors or if it is also influenced by macroeconomic shocks and factors of the economy. The study is quantitative and secondary data is employed in order to conduct this paper. The sample size is financial data of scheduled banks in Pakistan from the year 2000 to2022, which is converted in quarter data and 84 observations have been incorporated in the study. “Returns on Assets” (ROA) is selected as dependent variable of this study since it measures profitability of banks. Whereas “Foreign Direct Investment” (FDI), “Exchange rate” (LER), “Inflation” (INF), “GDP growth” (GROWTH), “Liquidity” (LLIQ), “Total Deposits” (LT_DEP) and “Credit’s ratio” (CREDIT) of the banks are selected as independent variables. The data for bank specific variables is collected from the websites of “State Bank of Pakistan” (SBP) and “Federal Reserves of Economic Data” (FRED) while the data for macroeconomic variables is derived from the database of “World Bank” and “Macrotrends”. For empirical analysis, we have applied “Vector Autoregression” (VAR) model, followed by “Multivariate Granger Causality test”, “Impulse Response Function” (IRF) and “Forecast Error Variance Decomposition” (FEVD). The main findings of study reveals that the profitability of Banking sector in Pakistan is more influenced by its own internal factors rather than the external / macroeconomic factors. Amongst macroeconomic variables, “Foreign Direct Investment” (FDI) and “Inflation” (INF) are found to have the significant impact, while “Exchange rate” (LER) and “GDP growth rate” (GROWTH) are found to have insignificant impact on banks’ “Return on Assets” (ROA). All the internal factors of our study i.e. “Liquidity” (LLIQ), “Deposits” (LT_DEP) and “Credit ratio” (CREDIT) are found to have significant impact on profitability, which is measured through “Return on Assets” (ROA). In short, the profitability of banking sector in Pakistan is mainly influenced by bank-specific internal factors of the industry. The macroeconomic factors are only 50 percent % affective on the banks’ performance.

Exploring the Role of Islamic FinTech Innovation Trialability and Compatibility in Enhancing Islamic Financial Inclusion: A Data-driven Approach

The promotion of Islamic financial inclusion (IFI) is a challenge for Islamic banking industry in Pakistan. Although, Islamic banks are trying to enhance IFI, however, a satisfactory level is not achieved. Therefore, the objective of this study is to examine the role of trialability and compatibility in enhancing IFI. A questionnaire survey was preferred in this study to collected data from clients of Islamic banks in Punjab, Pakistan. 317 valid questionnaires were received and used to obtain findings. Structural Equation Modeling (SEM) was used through Smart PLS to test the study hypotheses. Findings of the study identified that trialability and compatibility has a positive role to promote IFI. Furthermore, compatibility has a positive effect on IFI, however, trialability does not influence IFI directly, it has indirect effect through Islamic FinTech adoption (IFA). Findings of the study provided various important insights for the policymakers to promote IFI.

Is the financial industry ready for circular economy and sustainable development goals? A case of a developing country

PurposeThis study aims to examine the role of Pakistan’s banking industry in the transition toward a circular economy (CE) and the implementation of sustainable development goals (SDGs).Design/methodology/approachThis study uses a qualitative content analysis technique on 75 annual reports of 25 Pakistani banks. Data has been collected from websites and annual reports of concerned banks incorporating CE practices and SDGs in their annual reports. In addition, the data collected from the annual reports of concern sample is based on three dimensions of sustainable development (environmental, social and governance) along with the leading practices of CE to reduce, reuse, recycle, redesign, restructure, and recover.FindingsThe findings show that most firms have reported CE and SDGs. Also, the study explores the level and linkage of CE and SDGs practices among the sample firms.Research limitations/implicationsThis study provides important insights for the regulators, policymakers, State Bank of Pakistan, commercial banks and stakeholders in Pakistan’s banking industry. It adds significant value to the CE and SDGs, especially in developing economies like Pakistan.Originality/valueThe study has explored and examined the ever-investigated dimensions of SDGs and CE in the banking industry of Pakistan.

Outcomes of Humble Leadership on Employee Organizational Citizenship Behaviors; Mediating Role of Psychological Safety

The current study model asserts a certain influence concerning humble leadership over employees' outcome (OCB) is treated through psychological safety and draws its assumptions from the social exchange theory. According to the theory, leader humility fosters high levels of employee psychological safety in order to increases employee OCB towards the organization. An analysis of the findings was done utilizing a quantitative research approach. Due to the use of a time-lag research strategy, the sample size for this study is 247. Since data was collected from Pakistan's banking industry. The findings support the idea that humble leadership and employees' OCB are mediated by employees' psychological safety. The current study draws this conclusion based on its theoretical and methodological strengths, implications, and research limitations for the future.

Causality Assessment of Bankers’ Perceptions and Bank Specific Indicators on the Non-Performing Loans: An Empirical Analysis of the Commercial Banks of Pakistan

Objective: Non-performing loans have become a chronic problem in the banking industry of Pakistan over the last few decades. In this aspect, the study assessed the causal impact of Banks’ specific factors and bankers’ perceptions on non-performing loans.
 Methodology: The study is based on the data collected from 170 bankers of ten Commercial Banks of Pakistan. From bankers’ perspective, the study reported that the manager’s capability, the society’s orientation, interest waiver, and lenient credit terms have a negative impact on non-performing loans.
 Findings: In the light of finding the study suggests that the banks need to strengthen their internal control system and accountability arrangement for selecting genuine borrowers. Besides, the banks need to address moral hazard i.e. the borrowed funds are being used for the intended purpose.
 Implications: The study concludes that the banks may formulate an effective loan policy and revamp procedures within different phases of the “loan cycle”.

FinTech and Pakistan’s Banking Industry: An Exploratory Study

Technological development in the financial sector has influenced different segments of consumers differently. In the last decade, like other industries, driven by technological adaptation, the banking industry has also undergone regulatory changes and has, therefore, influenced how consumers interact with traditional financial services. FinTech has contributed to some of this transformation. Numerous new startups are already transforming the financial technology sector by creating cutting-edge financial services and products for consumers. This study provides a better understanding of the current position and FinTech implementation strategy in Pakistan's commercial banking sector. It also investigates the barriers to adopting Fintech and its impact on the banking sector. Twelve in-depth interviews were conducted with the assistant manager, operations manager, and bank branch manager as part of the qualitative study. These interviews provided insights into the current situation of the banking industry to Fintech. The factors reported in this study are Challenges and Barriers to the adoption of Fintech. Factors are Lack of Budget, Lack of Rules and Regulations, Cybercrimes, and Hacking. Requirements for the adoption of Fintech factors are E-commerce activities, SBP Role, Training, and Advanced ICT Infrastructure. The impact of Fintech on Pakistan's banking sector is efficiency, innovation, competitiveness, and customer service. The study contributes to the knowledge of practice-related stakeholders, offering valuable insights into Fintech and its effects on the banking industry in Pakistan. The study thus offers valuable insights for policy managers who are engaged with promoting Fintech in Pakistan's banking sector to offer better services to customers and upgrade industry practices.

EMPLOYABILITY SKILLS FOR GRADUATES TO JOIN THE BANKING SECTOR IN PAKISTAN

This study aims to identify the employability skills of graduates passionate to join the banking industry in Pakistan. Eleven factors related to employability skills are included explicit knowledge, tacit knowledge, hard skills, soft skills, intellectual abilities, physical abilities, conscientiousness, agreeableness, emotional stability, openness, and extroversion. Managers are requested to indicate the importance of these skills for graduates willing to join the banking industry and share their satisfaction related to the tasks done by the fresh banking graduates under their supervision. The study uses Mean, Standard deviation, One Sample T-test and Coefficient of variation to rank each skill by managers. Results of the study reveal that 'openness', 'tacit knowledge and 'consciousness' ranked in the top three positions as far as the employability skills required in the banking sector, where as 'physical ability’ is ranked lowest. This study's results are imperative for bank managers and educational institutions to guide and train graduate according to the market needs and skills requirements.

AN INVESTIGATION OF MACROECONOMIC FACTORS ON NON-PERFORMING LOANS: A STUDY BASED ON COMMERCIAL BANKS OF PAKISTAN

Following privatisation, Pakistan's banking industry grew and is now one of the main drivers of the country's economy. Nonetheless, the sector is vulnerable to a number of hazards, the most important of which is credit risk. This risk appears when borrowers fail to make their loan payments on schedule, which leads to non-performing loans. In order to maintain their operational, liquidity, and profitability position, banks must manage these loans. This study looks into how the nation's economic circumstances, inflation, and interest rates affect non performing loans. Time-series data analysis is used, and secondary data covering the last ten years (2008–2017) is used. The study looks at the link between the independent and dependent variables using a multivariate linear regression model. Non-performing loans are the dependent variable, whereas interest rates, inflation, and the nation's economic status (as indicated by GDP) are the independent factors. The study found that the non-performing loans of Pakistani commercial banks are significantly influenced by all three variables. On the other hand, there is an inverse relationship between inflation, GDP, and NPL, whereas there is a direct association between interest rates and NPL. The study's findings will assist Pakistan's banking industry in lowering the percentage of non performing loans.

Higher Interest Rate & Credit Risk Management: Insights for Pakistan's Banking Sector from Us Silicon Valley Bank

This paper examines the latest interest rate trends and credit risk management for the performance of Pakistan’s banking industry and drawing lessons from the default of Silicon Valley Bank. In the ever-evolving landscape of the banking industry, the delicate balance between interest rates and credit risk management emerges as a pivotal force shaping the sector's performance. This research provides a roadmap for financial institutions to harness the moderating influence of interest rates on credit risk, ultimately enhancing performance and resilience. Pakistan's banking industry must learn from the experiences and apply them to their own risk management practices. The study emphasizes the need for enhanced risk assessment frameworks, including thorough borrower evaluation, stress testing, and scenario analysis. It was conducted by well-structured questionnaire from a sample of 230 seasoned, experienced employees of top ten banks of Pakistan. The results of multiple regression showed that three variables: Credit Risk Management (CRM hereafter), Bank Performance and Interest rate are interconnected, statistically significant, affect each other and interest rate contribute in performance and strengthen CRM techniques. The study is quite useful for understanding and comprehending the changes in Pakistan’s banking industry over the past and in the latest scenarios of higher interest rates. Future contribution will be that this research will supply the foundation for other researchers who wish to dig into monetary policies and related disciplines.

The Nexus Between Fintech Adoption & Bank Performance: A Role of Competitiveness

This research investigates the relationship between fintech adoption, competitiveness, and bank performance within Pakistan's banking industry, encompassing Islamic and conventional banking practices. This study empirically examines the impact of fintech adoption on the performance of banks in Pakistan, unveiling a nuanced relationship shaped by the moderating effect of competitiveness. The findings of this research reveal that the relationship between fintech adoption and bank performance is significantly influenced by competitiveness, displaying a complex interplay with both positive and negative implications. While fintech adoption holds the potential to enhance banks’ efficiency, profitability, and customer loyalty, it also introduces challenges and threats to the established norms of the traditional banking sector. Moreover, this study identifies several critical research gaps and proposes avenues for future investigations to comprehensively understand the role of Fintech within Pakistan's financial system. The evolution and integration of Fintech present both opportunities and challenges, underscoring the need for continued exploration and analysis to navigate this transformative landscape better. However, this research contributes to understanding how adopting Fintech impacts bank performance in Pakistan, highlighting the moderating role of competitiveness and the duality of opportunities and challenges presented by Fintech in the banking realm.

Impact of Asset Quality on Financial Stability of Islamic Banks in Pakistan: A Moderating Role of Corporate Image

The study encompasses the financial stability management in the Islamic banking industry in Pakistan keeping in view the impact of asset quality and moderating role of corporate governance. Five Islamic banks were selected for the study, and secondary data was analyzed and obtained from the annual financial reports for eleven years from 2010-to 2020. After using descriptive statistics, correlation analysis, variance inflation factor, regression analysis, and fixed and random effect model, results show that CAR and LDR significant impact on z-score whereas Bs, Bind, and CEO duality are positively significantly associated with z-score. Moreover, the mean average value of financial ratios shows that LDR and CAR have a better impact on z-score than the NPL.