SAJMS - South Asian Journal of Management Sciences

A Comparative Study on Bank’s Profitability before, during and after Crises

The purpose of this research is to examine the outcome of liquidity crunch on bank profitability. Comparison of bank’s profitability has been done for a panel of 30 Pakistani banks over the period of 2003 to 2010. Focus has been kept on total bank profits and its components: Gross Profit, ROE and ROA. Three eras have been selected as 2003-2006: Before crisis, year 2007-2008 as crises era and year 2009-2010 as after crisis era. The Independent Sample T Test analysis results suggest that bank’s profitability has a direct relationship with liquidity crunch and the profitability of banks has been affected more by the liquidity crunch. It has been confirmed that Gross profit of banks has been decreased before, during and after crisis era. This means liquidity crunch has affected gross profit of banks to a major extent. No changes occurred in the ROA and ROE of banks between before, during and after crisis. The study is beneficial to banking sector to overcome the uncertainties that decrease bank profitability in liquidity crunch.

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