...s oНОВИНИ ЗАРУБІЖНОЇ НАУКИ 415 Mian Sajid Nazir1, Aqsa Butt2, Muhammad Musarrat Nawaz3 INTEREST RATE DETERMINANTS OF BANKS IN PAKISTAN This study attempts to investigate determinant factors of interest rate differential on deposits and loan accounts of Pakistani banks. For this purpose 4 year data on 30 banks is included in this research paper. The empirical results based on the correlational analysis of the relationship between weighted average rate of interest and 10 independent variables which are credit risk, amount of deposit, administrative cost, profit margins, bank's liquidity, amount of loan, market share, inflation rate, macroeconomic conditions and bank specific factors. These variables will help to highlight customer reaction towards variation in interest rates which help banks to review their policies regarding interest rates, margins and risk premium. The results shows that credit risk, administrative costs, profit margins and deposit amounts are important factors for the interest rate determination and these are positively related with interest rate. Bank's liquidity and deposit amount have negative relationship with interest rate. Meanwhile, inflation and market share have no significant relationship with interest rate fluctuations. Keywords: interest rate; banking sector; Pakistan; risk; deposits. Міан Саїд Назір, Акса Батт, Мухаммад Музаррат Наваз ЧИННИКИ, ЩО ВИЗНАЧАЮТЬ ВІДСОТКОВІ СТАВКИ У БАНКАХ ПАКИСТАНУ У статті зроблено спробу визначити чинники...
Words: 5033 - Pages: 21
...topic. 1 Determinants Of Capital Structure in cement industry of Pakistan 2 Impact of interest rate on stock market 3 A study based on the effects of interest rate (KIBOR) on share price 4 Market Interest rate and commercial bank profitability in Pakistan 5 Determinants of Corporate dividend payout policy 6 Effects of Free Cash flow on profitability of firms 7 Determinant of dividend payout ratio: A study of Pakistani fertilizer sector 8 Fundamentals and stock returns in Pakistan 9 Effects of mergers and acquisition in banking sector of Pakistan 10 Impact of Privatization of banks on profitability 11 Can risk aversion indicators anticipate financial crises? 12 Cash flow and capital spending relationship: evidence from automobile sector 13 Impact of Privatization on profitability and efficiency of banks in Pakistan 14 To study the relationship between price earning ratio and return on investment 15 A test of price earning ratio to predict future growths 16 Factors affect on the dividend payout ratio (sugar industry) 17 Impact of macro-economic variables on stock sector of Pakistan 18 Relationship between Cash flow and investment spending in textile industry 19 Impact of taxation on firm’s dividend payout/ratio 20 Share price volatility explicatedmeasured by fundamentals 21 Stock price and economic variables ( Interest rate, inflation and GDP) 22 Determinants of P/E Ratio 23 Impact of capital structure on profitability 24 Impact of interest rate changes on...
Words: 789 - Pages: 4
...momentum of Pakistan’s economy. Due to lack of investor confidence, private investment has reached its lowest point in the recent economic history of the private sector led growth phase (1978 to 2002) in Pakistan. This paper argues that economic as well as non-economic factors are responsible for this declining investment. Economic policies are formulated in such a manner that the short-term objectives of lowering the fiscal and trade deficits were to some extent achieved but overall economic performance and investment were ignored. In order to control external trade deficits, a policy of devaluation increased the cost of production through an increase in prices of imported raw material especially of plant and machinery. Higher real interest rates due to excessive public borrowing that were due to the failure in reducing fiscal deficits has resulted in financial crowding out and has corroded the savings that might be used to finance private investment. The unexplained part of private investment that is not determined by economic factors can be attributed to non-economic factors, which include internal and external shocks. These shocks start from the sanctions which were imposed after the nuclear blast. Events following that initial shock like the freezing of foreign currency accounts, the military coup, the harassment of the partially successful accountability drive of the military government, the 9/11 incident, the Afghan war and tensions on the Pak-India border have complemented...
Words: 5689 - Pages: 23
...| Addis Ababa University College of Business and Economics Masters of Business Administration Factors influencing the Profitability of Private Commercial Banks in Ethiopia Abraham Redi I.D. No. 1444/07 Section I Submitted to: Matios Ensermu (PhD) Presented as a Partial Fulfillment for the course Business Research Methodology (MGMT601) December, 2015 Addis Ababa, Ethiopia I. Table of Contents Chapter One ……………………………………………………………………………………….1 1.1 Introduction 1 1.2 Background of the Study 3 1.3 Statement of the Problem 5 1.4 Research Questions 6 1.5 Objectives of the Study 7 1.5.1 General Objective of the Study 7 1.5.2 Specific objective of the study 7 1.6 Scope and Limitation of the Study 7 1.6.1 Scope of the Study 7 1.6.2 Limitation of the Study 8 1.7 Significance of the Study 8 1.8 Operational Definitions 9 1.9 Organization of the paper 9 Chapter Two ……………………………………………………………………………………...10 2 Literature Review 10 2.1 Measures of Bank Performance/Profitability 10 2.2 Factors Influencing Bank Performance/Profitability 10 2.3 The influence of Bank-specific factors on Bank Profitability 11 2.3.1 Capital Adequacy 11 2.3.2 Assets Quality 12 2.3.3 Management Efficiency: Operational Costs Efficiency 12 2.3.4 Earning ability: Diversification of Income 13 2.3.5 Liquidity 14 2.4 The Influence of Industry-specific Factors...
Words: 7237 - Pages: 29
...Determinants of Banking Instability in Malaysia Final Year Project Proposal – April 2015 Submitted By: Name & Roll Number Submitted To: Supervisor’s Name: This proposal is submitted to SEGi UNIVERSITY on 10/04/15, in partial fulfillment of the requirement for the degree BBM. EXCLUSIVE RIGHTS ALL RIGHTS RESERVED. No part of this paper may be reproduced, stored in a retrieval system or transmitted in any form or by any means without the prior consent of the author. DECLARATION I hereby declare that: * This undergraduate research project is the end result of my own work / research and that due acknowledgement has been given in the references. * No portion of this research project has been submitted in support of any application for any other degree or qualification of this or any other university. * The word count of this research proposal is 10,276 words. Name of the Student Signature Date ACKNOWLEDEMENTS I would like to thank my Final year project’s supervisor [NAME], who has been an inspiration and provided me information regarding banking instability, which proved to be very useful in completing this project. I also appreciate the hard work and efforts of my friends and former colleagues who has provided me with useful information / data which helped me choose this topic. PREFACE This research paper is submitted in partial fulfillment of the requirement for Bachelor of Business Administration (HONS)...
Words: 10685 - Pages: 43
...Research Article: IMPACT OF INTEREST RATE ON INVESTMENT Farhan Nawaz UNIVERSITY OF GUJRAT, PAKISTAN Waqas Akram UNIVERSITY OF GUJRAT, PAKISTAN Abstract: The main aim of this study is to investigate “the impact of interest rate on investment” in an economy. For this purpose three main variables are selected which are Interest rate, Income level and Investment. Two variables are independent (Interest rate and Income level) and One variable is dependent (Investment). The hypothesis of this study is that the Investment has a negative association with interest rate and Investment has positive relationship with income. Interest rate has negative effect on investment and investment has a positive relation with the income level. We use questionnaire for finding our results and questionnaire are filled by different students of business studies. We find that there is a Negative relation between the interest rate and investment. If our finding matches with economic theory and others researchers finding than policy makers can make better policies for the economy. Impact of interest rate on Investment Introduction: An interest rate is the rate at which interest is paid by borrowers for the use of money that they borrow from a lender. Interest rate is the cost of borrowing money. When interest rate increases the overall investment is reduces. Most of the businesses invest partially or wholly is credited. When increases in the interest rate companies have to put more...
Words: 1665 - Pages: 7
...Research Article: IMPACT OF INTEREST RATE ON INVESTMENT Farhan Nawaz UNIVERSITY OF GUJRAT, PAKISTAN E-mail: 10050920-086@uog.edu.pk Waqas Akram UNIVERSITY OF GUJRAT, PAKISTAN E-mail: 10050920-084@uog.edu.pk Abstract: The main aim of this study is to investigate “the impact of interest rate on investment” in an economy. For this purpose three main variables are selected which are Interest rate, Income level and Investment. Two variables are independent (Interest rate and Income level) and One variable is dependent (Investment). The hypothesis of this study is that the Investment has a negative association with interest rate and Investment has positive relationship with income. Interest rate has negative effect on investment and investment has a positive relation with the income level. We use questionnaire for finding our results and questionnaire are filled by different students of business studies. We find that there is a Negative relation between the interest rate and investment. If our finding matches with economic theory and others researchers finding than policy makers can make better policies for the economy. Impact of interest rate on Investment Introduction: An interest rate is the rate at which interest is paid by borrowers for the use of money that they borrow from a lender. Interest rate is the cost of borrowing money. When interest rate increases the overall investment is reduces. Most of the businesses invest partially or wholly is credited...
Words: 1679 - Pages: 7
...Economic Studies Vol. 12, No. 1, June 2008 3 Determinants and Consequences of Non-Interest Income Diversification of Commercial Banks in OECD Countries* 1) Joon-Ho Hahm Professor, Graduate School of International Studies, Yonsei University jhahm@yonsei.ac.kr This paper studies determinants and consequences of the changing income structure of commercial banks in the era of financial conglomeration. Utilizing a dataset of 662 relatively large commercial banks in 29 OECD countries from 1992 to 2006, we find that banks with relatively large asset sizes, low net interest margins, high impaired loan ratios, and high cost-income ratios tend to exhibit higher non-interest income shares. As for macroeconomic factors, banks in countries with slow economic growth, a stable inflation environment, and welldeveloped stock markets tend to show higher non-interest income shares. Second, we investigate the consequences of non-interest income expansion on bank profitability and risks. While the positive effects on profit and capital adequacy seem to become weaker under the consideration of macroeconomic factors and endogeneity problems, the adverse impact on profit variability remains robust. Overall, these findings suggest that expanding toward non-interest income may not produce desired income diversification effects, and it does not necessarily imply a shift toward superior return-risk frontiers. Keywords: Commercial Bank, Non-interest Income, Bank Profitability, Bank Risk * This...
Words: 9807 - Pages: 40
...Corporate Finance Fundamentals [FN1] Examination Blueprint 2010–2011 Purpose The Corporate Finance Fundamentals [FN1] examination has been constructed using an examination blueprint. The blueprint, also referred to as the test specifications, outlines the content areas covered on the examination and the weighting allotted to each content area. This document also lists the topics, the level of competence for each topic, and the related learning objectives. The learning objectives have been designed to ensure that the competencies are met. In addition, information is provided on the proportion of each question type presented in the examination (that is, multiple choice, quantitative problems, and so on). Use Students should use the examination blueprint to prepare for the course examination. The blueprint may not include all the topics listed in the course outline; however, students are still responsible for acquiring a broad-based knowledge of all topics not listed in the blueprint since these topics will be tested in assignment and review questions. The topics not listed in the blueprint will also provide students with a greater depth of understanding of finance concepts. Examination Objectives The objectives of this 3-hour, comprehensive examination are to test CGA students on the prerequisite knowledge required for the completion of Accounting Business Case [BC1] and advancement into Financial Accounting Consolidations and Advanced Issues [FA4], Accounting Theory and Contemporary...
Words: 2503 - Pages: 11
...FACTORS AFFECTING PERFORMANCE OF COMMERCIAL BANKS IN KENYA BY MAURICE MUIRURI KAARIUKI A RESEARCH PROPOSAL SUBMITTED TO THE SCHOOL OF BUSINESS IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTERS IN BUSINESS ADMINISTRATION, DEGREE OF KENYATTA UNIVERSITY. JULY, 2014 DECLARATION Declaration by the Researcher This research is my original work and has not been presented for a degree in any other University. No part of this study may be reproduced without prior authority of the author and/or Kenyatta University. Signature……………………………………………………… Date………………………. Maurice Muiruri Kariuki Declaration by the Supervisor This research proposal has been submitted for examination with my approval as the university supervisor. Signature……………………………………………………… Date………………………. Name (PhD.) School of Business ACKNOWLEDGEMENT I take this opportunity to express my gratitude and regards to Professor name (PhD.) for his guidance. I am indebted to all the persons and institutions that offered support, encouragement and prayers to me during the entire research. Lastly, I thank almighty, my parents, brother, sisters and friends for their constant encouragement without which this assignment would not be possible. ABSTRACT The study seeks to investigate the factors affecting performance of commercial banks in Kenya. The Background of the study reveals that there has been continued globalization and economic cooperation among the...
Words: 10187 - Pages: 41
...Lecture 6 and 7: The Aggregate Expenditures Model Reference - Chapter 7 learning OBJECTIVES 1. The factors that determine consumption expenditure and saving. 2. The factors that determine investment spending. 3. How equilibrium GDP is determined in a closed economy without a government sector. 4. What the multiplier is and its effects on changes in equilibrium GDP. 5. How adding international trade affects equilibrium output. 6. How adding the public sector affects equilibrium output. 7. The distinction between equilibrium versus full-employment GDP. I. Introduction A. This chapter focuses on the aggregate expenditures model. We use the definitions and facts from previous chapters to shift our study to the analysis of economic performance. The aggregate expenditures model is one tool in this analysis. Recall that “aggregate” means total. B. As explained in this chapter’s Last Word, the model originated with John Maynard Keynes (Pronounced Canes). II. Simplifying Assumptions for the Simple Model A. We assume a “closed economy” with no international trade. B. No Government. C. Although both households and businesses save, we assume here that all saving is personal. D. Depreciation and net foreign income are assumed to be zero for simplicity. E. There are two reminders concerning these assumptions. 1. They leave out two key components of aggregate demand...
Words: 2519 - Pages: 11
...FIN301 Module 2 Instructions for CASE and SLP Assignments 07-13-15 Module 2 - Home ------------------------------------------------- PRESENT VALUE Modular Learning Outcomes Upon successful completion of this module, the student will be able to satisfy the following outcomes: * Case * Explain the concept of present value. * Calculate the present value of a future stream of income. * Describe the determinants of the discount factor. * Explain the determinants of present value. * SLP * Explain the concept of present value. * Describe the determinants of the discount factor. * Explain the determinants of present value. * Discussion * Explain the concept of present value. * Describe the determinants of the discount factor. Module Overview In order to value assets such as stocks, bonds, or investment projects, you need to be able to place a value on payments that you will receive in the future. If you as a financial manager with to invest in some new equipment, you need to be able to place a value on the total amount of additional profits your company will receive over the next several years due to this new purchase. In general, people prefer to have money paid to them today rather than tomorrow. The value of one dollar today is exactly one dollar. But what about being paid one dollar exactly one year from now? Would you pay a dollar for the that dollar to be paid to you in one year? Definitely not! Of...
Words: 1797 - Pages: 8
...Topics: 1. Industry – Definition i. An industry is defined at a lower, more basic level: a market in which similar or closely related products and/or services are sold to buyers. ii. Industry is the production of an economic good or service within an economy. iii. A classification that refers to a group of companies that are related in terms of their primary business activities. 2. Competition – Essence i. Competition energizes the participants, stimulates creativity and ultimately results in the greatest discoveries and inventions the mind can comprehend. ii. The essence of competition isn’t always to be number one, but to strive for excellence. 3. Macro – Economic Factors that impact the industry Business is affected by the external environment as it is by the competitors. It is important that firms are aware of the changes in the external environment to be successful. Understanding the influence of Macroeconomic factors helps the firms to determine the current market conditions and how beneficial will they be for the success of their business. Various macroeconomic factors that influence the business are: i. Economic Growth Economic activities refer to the level of buying and selling activities happening in an economy over a time period. It is a highly complex activity and keeping accurate track of it is beyond comprehension. Economic activity is not constant and can change rapidly, thereby affecting the business. Economic activity changes...
Words: 2968 - Pages: 12
...CHAPTER 9 Basic Macroeconomic Relationships A. Short-Answer, Essays, and Problems 1. Define the consumption and saving schedules. 2. Explain how consumption and saving are related to disposable income in the aggregate expenditures model. 3. Complete the following table assuming that (a) MPS = 1/5, (b) there is no government and all saving is personal saving. Level of output and income Consumption Saving $250 $260 $___ 275 ____ ___ 300 ____ ___ 325 ____ ___ 350 ____ ___ 375 ____ ___ 400 ____ ___ 4. Complete the following table assuming that (a) MPS = 1/3, (b) there is no government and all saving is personal saving. Level of output and income Consumption Saving $100 $120 $___ 130 ____ ___ 160 ____ ___ 190 ____ ___ 220 ____ ___ 250 ____ ___ 5. Differentiate between the average propensity to consume and the marginal propensity to consume. 6. What are the marginal propensity to consume (MPC) and marginal propensity to save (MPS)? How are the two concepts related? How are the two concepts related to the consumption and saving functions? 7. Suppose a family’s annual disposable income is $8,000 of which it saves $2,000. (a) What is their APC? (b) If their income rises to $10,000 and they plan to save $2,800, what are their MPS and MPC?...
Words: 5910 - Pages: 24
...(on the other currency). 6.4 In what sense is a currency forward contract a combination of a put and a call? A currency forward contract to buy currency f at a forward price of FTd/f at time T can be replicated by purchasing a European call option on currency f with the same expiration date and an exercise price Kd/f = FTd/f and simultaneously selling a put option at the same exercise price and maturity date. Conversely, a short forward contract on currency f is a combination of a written call on f and a purchased put on f with the same expiration date and exercise price. 6.5 What are the six determinants of a currency option value? The determinants of currency option values are riskless domestic and foreign interest rates, the exercise price, the underlying spot (or futures) price, the expiration date, and the volatility of the underlying exchange rate. 6.6 What determines the intrinsic value of an...
Words: 2316 - Pages: 10
