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THE NEXUS OF EFFICIENCY AND PROFITABILITY A CASE STUDY OF PRIVATE COMMERCIAL BANKS OF PAKISTAN

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54 Pages : 434-450

http://dx.doi.org/10.31703/gssr.2019(IV-IV).54      10.31703/gssr.2019(IV-IV).54      Published : Dec 2019

The Nexus of Efficiency and Profitability: A Case Study of Private Commercial Banks of Pakistan

Abstract

    The study aimed at exploring the relationship between efficiency and profitability of private commercial banks operating in Pakistan. The efficiency represented by technical efficiency has been assessed by non-parametric data envelopment analysis approach while profitability indicated by return on assets has been computed through conventional ratio analysis for period 2009 to 2013. The analysis revealed that technical efficiency declined during the study period and remained at 89%. HMB was identified as the top-performing bank in technical efficiency while MCB remained highly profitable. Banks were then grouped based on TE and ROA. MBL, UBL, DIB, SCB, BAH, HBL and HMB observed as top-performing banks based on TE and ROA. These banks are considered a role model for other inefficient and less profitable banks. Whereas, other banks were grouped as weak, based on below-average ROA and TE scores. These banks can adopt distinct product mix or business strategies to become profitable in future.

    (1) Farhat Ullah Khan
    Assistant Professor, Department of Business Administration, Gomal University, Dera Ismail Khan, KP, Pakistan.
    (2) Aman Ullah Khan
    Assistant Professor, Department of Business Administration, Gomal University, Dera Ismail Khan, KP, Pakistan.
    (3) Siraj -Ud- Din
    Assistant Professor, Department of Management Sciences, Khushal Khan Khattak University, Karak, KP, Pakistan.
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Cite this article

APA

    APA : Khan, F. U., Khan, A. U., & Din, S. -. (2019). The Nexus of Efficiency and Profitability: A Case Study of Private Commercial Banks of Pakistan. Global Social Sciences Review, IV(IV), 434-450. https://doi.org/10.31703/gssr.2019(IV-IV).54

CHICAGO

    CHICAGO : Khan, Farhat Ullah, Aman Ullah Khan, and Siraj -Ud- Din. 2019. "The Nexus of Efficiency and Profitability: A Case Study of Private Commercial Banks of Pakistan." Global Social Sciences Review, IV (IV): 434-450 doi: 10.31703/gssr.2019(IV-IV).54

HARVARD

    HARVARD : KHAN, F. U., KHAN, A. U. & DIN, S. -. 2019. The Nexus of Efficiency and Profitability: A Case Study of Private Commercial Banks of Pakistan. Global Social Sciences Review, IV, 434-450.

MHRA

    MHRA : Khan, Farhat Ullah, Aman Ullah Khan, and Siraj -Ud- Din. 2019. "The Nexus of Efficiency and Profitability: A Case Study of Private Commercial Banks of Pakistan." Global Social Sciences Review, IV: 434-450

MLA

    MLA : Khan, Farhat Ullah, Aman Ullah Khan, and Siraj -Ud- Din. "The Nexus of Efficiency and Profitability: A Case Study of Private Commercial Banks of Pakistan." Global Social Sciences Review, IV.IV (2019): 434-450 Print.

OXFORD

    OXFORD : Khan, Farhat Ullah, Khan, Aman Ullah, and Din, Siraj -Ud- (2019), "The Nexus of Efficiency and Profitability: A Case Study of Private Commercial Banks of Pakistan", Global Social Sciences Review, IV (IV), 434-450

TURABIAN

    TURABIAN : Khan, Farhat Ullah, Aman Ullah Khan, and Siraj -Ud- Din. "The Nexus of Efficiency and Profitability: A Case Study of Private Commercial Banks of Pakistan." Global Social Sciences Review IV, no. IV (2019): 434-450. https://doi.org/10.31703/gssr.2019(IV-IV).54