Impact Of Global Financial Crisis On The Performance Of Commercial Banks Of Pakistan –A Case Study Of MCB Bank Limited
Author(s)
Dr.Faiz Muhammad Shaikh , Prof Dr Najma , Dr.Munawwar Ali Kartio , Albeena Mirza ,
Download Full PDF Pages: 116-126 | Views: 309 | Downloads: 101 | DOI: 10.5281/zenodo.3469353
Abstract
Objectives:
The objective of study is to investigate the effect of global financial crisis on the efficiency & performance of MCB bank Ltd. The crisis were basically started in United States after the collapse of subprime mortgage market but engulfed the entire globe though the level of severity was different from country to country
Data Collection Methodology:
Data were collected from various secondary sources and data were analyzed by using various financial ratios meant for liquidity, profitability & solvency. The banks play an important role of financial intermediation; channelize savings of public to investors hence basic key performance indicators for this research were deposits, profit, advances and capital
Objectives:
The objective of study is to investigate the effect of global financial crisis on the efficiency & performance of MCB bank Ltd. The crisis were basically started in United States after the collapse of subprime mortgage market but engulfed the entire globe though the level of severity was different from country to country
Data Collection Methodology:
Data were collected from various secondary sources and data were analyzed by using various financial ratios meant for liquidity, profitability & solvency. The banks play an important role of financial intermediation; channelize savings of public to investors hence basic key performance indicators for this research were deposits, profit, advances and capital
Results/Findings:
An attempt has been made to examine the growth and sustainability of sample bank through its performance from 2003 to 2012, before and after crisis. The main findings are (I) the profitability was affected adversely (II) Non Performing Loans were increased significantly after tight control and management for several years. (III) It was explored that costly deposits were mobilized to maintain the book size and restore the confidence of depositors and all stake holders. (IV)The stability of the system remained unquestionable due to maintenance of Capital Adequacy Ratio well above the targeted ratio of 8 % in terms of Basel accord.
Practical Implications:
This research attempts to address the issue of banking crisis and has practical implication in the Pakistani banking industry.An attempt has been made to examine the growth and sustainability of sample bank through its performance from 2003 to 2012, before and after crisis. The main findings are (I) the profitability was affected adversely (II) Non Performing Loans were increased significantly after tight control and management for several years. (III) It was explored that costly deposits were mobilized to maintain the book size and restore the confidence of depositors and all stake holders. (IV)The stability of the system remained unquestionable due to maintenance of Capital Adequacy Ratio well above the targeted ratio of 8 % in terms of Basel accord.
Practical Implications:
This research attempts to address the issue of banking crisis and has practical implication in the Pakistani banking industry.
Keywords
Global Financial Crisis, Commercial Banks, Deposits, Liquidity, profitability, Non Performing Loans
References
- A. B. Ashcraft and T. Schuermann, “Understanding the Securitization of Subprime Mortgage Credit”, FIC Working Paper n° 07-43, Wharton Financial Institutions Center, Philadelphia, Pa., 2007.
- J.P. Morgan Corporate Quantitative Research, "Credit Derivatives Handbook,", J.P. Morgan, New York, December 2006, p. 6.
- Alan Zibel, “'Liar loans' threaten to prolong mortgage crisis” (2008)
- Ahmed, O. B. (2001). Islamic Financial Instruments to Manage Short-Term Excess Liquidity (2nd Edition ed.). Jeddah: Islamic Development Bank.
- Bartlett, D. (2008) Fallout of the Global Financial Crisis, RSM International Association, accessed on May 2014 at http://www.rsmchina.com.cn/attachments/month_0908/m20098271225.pdf
- Charnes, A. Cooper W W and Rhodes E (1978) Measuring Effeciency of Commercial banks with the use of Financial ratios and Data Envelopment Conventional Banks” IIUM Journal of Economics & Management Vol 10 No 1 pp 1-25
- Dar K.H and Shimerda ,T (1981) “An Empirical Analysis of Useful financial ratios “ Financial Management Vol10 No 1 pp 51-60 Lowenstein The End of wall Street p.37
- Muljawan, D.; H. Dar, and M. J. B. Hall (2002), “A Capital Adequacy Framework for Islamic Banks: The Need to Reconcile Depositors’ Risk Aversion with Managers’ Risk Taking” ,Loughborough University Economics Papers, Financial Cycles: What? How? When? StijnClaessens, M. AyhanKose and Marco E. Terrones1 April 2011
- Tarawneh, M. (2006), A Comparison of Financial Performance in the Banking Sector: Some Evidence from Omani Commercial Banks. International Research Journal of Finance and Economics, Issue (3). ISSN 1450- 2887
- WimNaudé. "The Global Economic Crisis and Developing Countries: Effects, Responses and Options for Sustainable Recovery" Poverty & Public Policy 2.2 (2010): 211.
- Yue, P. (1992), “Data Envelopment Analysis and Commercial Bank Performance: A Prime rwith Applications to Missouri Banks,” Working Papers, ICW Institute, University of Texas at Austin.
- Zaman, R., &Movassaghi, H. (2001). Islamic Banking: A Performance Analysis. The Journalof Global Business, 12(22), 31-38.