Research Article 46
Journal of Finance & Economics Research - Volume 9, Issue 2 2024
By Khurram Iftikhar, Shahista Azmat
10.20547/jfer2409204
Keywords: Liquidity Risk, Size, bank capital, credit risk.

Every sector of the financial system is responsible for putting appropriate financial procedures into place in order to adapt to the ever-changing conditions of the market. This study examines influence of liquidity position on profitability of 22 Pakistani commercial banks from 2006 to 2022 by applying Generalized Method of Moments (GMM) using annual data with an aim to enhance their profitability and maintain balanced approach. It is found that there is inverse and significant effect of liquidity; credit risk and firm size on banks profitability while positive and statistically significant influence of banks capital on banks profitability. Gross domestic product is found to negatively influence banks profitability due to fluctuations while lack of consumer price index anticipation entails negative impact on performance of Pakistani banks. Therefore, it is recommended that stable policies should be formulated for strengthening banking sector and for diversifying and balancing liquidity measures. The banking system in Pakistan will benefit from improved decision-making, longer-term growth, and financial stability as a result of importance of liquidity risk.

Submission Date: 23 Dec, 2024 Reviews Completed: 20 Jan, 2025
Acceptance Date: 21 Jan, 2025 Publication Date: 10 Mar, 2025