Title: Impact of bank capital regulation and GDP growth on profitability in commercial small and medium banks: empirical study

Authors: Shazaib Butt; Stéphane Strtak

Addresses: Royal Docks School of Business and Law, University of East London, Stratford Campus, Room UH.1.17, Water Lane, London, E15 4LZ, UK ' Relations Entreprises et Formation Professionnelle, ISC Paris, 22 Boulevard du Fort de Vaux, 75017 Paris, France

Abstract: We empirically examine the impact of Basel compliance and economic activity on the profitability of commercial small and medium banks of Pakistan during and post global financial crises of 2007–2008. Panel data setting is implemented using annual data from 25 commercial banks during the period 2007 to 2014. The data tested GDP growth rate and bank specific risk variables. We find strong evidence that market risk, non-performing loans, NPLs and GDP growth rate have significant impact on the profitability of small and medium commercial banks.

Keywords: capital adequacy ratio; CAR; Basel capital; commercial banks; NPLs; credit risk; market risk; operational risk.

DOI: 10.1504/IJESB.2020.104998

International Journal of Entrepreneurship and Small Business, 2020 Vol.39 No.3, pp.383 - 394

Received: 04 Jan 2018
Accepted: 28 Jan 2019
Published online: 10 Feb 2020 *

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