Research Article Open Access

EXPLORING THE IMPACT OF LIQUIDITY ON PROFITABILITY: EVIDENCE FROM BANKING SECTOR OF PAKISTAN

Abstract

This purpose of the research was directed to review the trade-off among liquidity and profitability in the banking sector. The research was applied to all listed banks of Pakistan Stock Exchange during the time period of 2010-2015. Document investigation was the key research method adopted to gather secondary data for the research. Six research models were stated and valued via Ordinary Least Squares (OLS) method. The observed outcomes exposed significant connection among bank liquidity ratios and return on assets, return on equity, net profit margin, and Tobin q. However, return on investment and earning per share relationship with liquidity is insignificant. These outcomes are chiefly appropriate as policymakers plan new standards establishing a suitable level of liquidity for banks. This will expand the profits of shareholders but will correspondingly improve the usage of the assets of the bank.

AHMAD WALEED, AHMAD TISMAN PASHA, ADEEL AKHTAR

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