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The document discusses researching the effect of macroeconomic variables on bank profitability in Pakistan. It proposes examining how economic growth, inflation, exchange rates, and interest rates impact bank return on equity and assets by analyzing financial data and statements from various banks over time. The research would formulate questions around each macroeconomic variable's influence on profitability and convert these into objectives to determine the overall impact of macroeconomic factors on Pakistani banks. Hypotheses are presented for each variable's expected significant effect.

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Arooj Imran
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50 views4 pages

Article 2

The document discusses researching the effect of macroeconomic variables on bank profitability in Pakistan. It proposes examining how economic growth, inflation, exchange rates, and interest rates impact bank return on equity and assets by analyzing financial data and statements from various banks over time. The research would formulate questions around each macroeconomic variable's influence on profitability and convert these into objectives to determine the overall impact of macroeconomic factors on Pakistani banks. Hypotheses are presented for each variable's expected significant effect.

Uploaded by

Arooj Imran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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What? Why?

Effect of macroeconomic variables has been


Effect of macroeconomic factors on bank’s researched worldwide and has proven to
profitability in Pakistan. impact the profitability of corporate firms.
Can the same model apply to banking
profitability?

How - conceptually? How – practically?

Financial data for banks is easy to obtain.


Is bank’s performance really dependent on
Financial statements will be used to compare
the macroeconomic variables or are there any
different macroeconomic variables and
other factors? If yes, then what factors?
different profitability levels of various banks.

Brain Storming Research Topic

1. The WHAT-WHY-HOW FRAMWEORK?

2. Narrowing Down Research Area, Field and Issues

Area or academic discipline


Finance

Field
Banking industry

Brainstorm issues, questions, puzzles


How many banks to include?
What banks to choose from?
How to determine time period of research?
What macroeconomic variables to use?
What performance measures to use? Profitability, return on equity, assets, or growth?
3. Formulate Research Questions

Research Question 1:
• Symptom: GDP
• Potential Issues: What is the impact of GDP on bank’s profitability
• RQ’s: Does GDP impact bank’s profitability?

Research Question 2:
• Symptom: Inflation
• Potential Issues: What is the impact of inflation on bank’s profitability
• RQ’s: Does inflation impact bank’s profitability?

Research Question 3:
• Symptom: Exchange rate
• Potential Issues: What is the impact of exchange rate on bank’s profitability
• RQ’s: Does exchange rate impact bank’s profitability?

Research Question 4:
• Symptom: Interest rate
• Potential Issues: What is the impact of interest rate on bank’s profitability
• RQ’s: Does interest rate impact bank’s profitability?

4. Convert Research Questions into Research Objectives

Hierarchal Trees
Impact of
macroeconomic
variables on bank's
profitability

Macroecono Bank's
mic factors profitability

Exchange
GDP Inflation Interest rate ROE ROA
rate

Research Questions
• Does GDP impact bank’s profitability?
• Does inflation impact bank’s profitability?
• Does exchange rate impact bank’s profitability?
• Does interest rate impact bank’s profitability?

Research Objectives

Main objective: The objective of this research is to determine the impact of macroeconomic

factors on bank’s profitability in Pakistan.

Specific Objectives:

i. Establish effect of economic growth (real GDP) on bank profitability in Pakistan.

ii. Examine effect of inflation on bank profitability in Pakistan.


iii. Evaluate effect of exchange rate on bank profitability in Pakistan.

iv. Investigate the effect of interest rate on bank profitability in Pakistan.

Hypothesis

H1: There is a significant impact of GDP on bank’s profitability


H2: There is a significant impact of inflation on bank’s profitability
H3: There is a significant impact of exchange rate on bank’s profitability
H4: There is a significant impact of interest rate on bank’s profitability

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