Impact of Liquidity Management Factors on Bank Profitability: Evidence from Pakistan

Abstract

The aim of study to investigate the factors effecting liquidity management and financial sector performance evidence from Pakistan. Liquidity usually affect the overall profitability/financial performance of any corporate sector. Various techniques of liquidity mitigation are important dealing with downturns in Pakistani economy regarding pandemic, unstable political situations in Pakistan and different time to time polices of state banks regulation which consist of BASEL amendments. Data of seven banks had been selected for the period 2010-2019 and analyzed by using certain statistical techniques which are descriptive statistics, correlation, and regression analysis. As from analysis we found that current ration and Liquidity liquidity ratio has positive significant effect on financial performance of bank, which is measured by ROA, ROE. Further, one of the liquidity factor which is quick ratio diverts from hypothesis which shows insignificant negative effect on financial outcome of Pakistani banks. The results of this study will help the management of banks to find better solutions to enhance the performance. Further, the policy implication of this study advises that banks should follow BASEL regulations and liquidity disclosures strictly to cope with market. The result of the study conclude that liquidity management and performance of financial sector has significant. The correlation result analysis shows the strong relation among the variables.