A Comparison of Financial Performance in the Banking Sector: Some Evidence from Pakistani Commercial Banks

Faisal Abbas, Muhammad Tahir, Mutee-ur Rahman

Abstract


The purpose of this study is to check the financial performance of the commercial banks of Pakistan by covering the period of five years from 2007 to 2011. The reasons for choosing this period is repaid growth of the banking sector of Pakistan and revolutionary change in financial performance of banks. There are more than twenty scheduled banks in Pakistan and out of those we have selected top five scheduled banks on the basis of their networks consist of more than 4000 branches. There are so many past studies in which the researchers used different financial ratio to check the financial performance of the Commercial banks such like Return on assets (ROA), Return on Equity (ROE), Return on Capital (ROC) and by using some other operating and efficiency ratios. But in this study, we used another indicator for assessment of financial performance that is Return on Operating Fixed Assets (ROFA). Return on Fixed Assets indicates that how the banks are using their Operating Fixed Assets and what is the contribution of the Operating Fixed Assets in the performance of the banks. This study shows that banks having more Total Assets, Total equity and Total operating fixed assets have better financial performance or not. Its does not means that the banks having higher total assets, higher total operating fixed assets and higher equity have better performance.


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