Author

  • Ahmed Arif

    • Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology, Islamabad, Pakistan
    • Pakistan

  • Afsheen Abrar

    • Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology, Islamabad, Pakistan
    • Pakistan

  • Mohammad Afzal

    • Comsats Institute of Information Technology, Islamabad, Pakistan
    • Pakistan

Abstract

The present study examines the role of credit risk in value creation process in banking system of Pakistan. This study here develops a conceptual model with three antecedents to credit risk. These antecedents are loan loss provision, advances, and capital adequacy ratio. The study analyzes the impact of these antecedents on accounting return on equity (ROE) and market return on shares (ROS). The data come from 20 banks listed on Karachi Stock Exchange (KSE) for 2004-2009. The study includes panel data analysis to analyze the relationship between the selected variables. The results of this study expose a minimal role of credit risk in value creation process in banking system of Pakistan. The results further reveal that banks with higher advances in their portfolio are successful in getting the confidence of shareholders.

Keywords

References

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How to Cite

Arif, A., Abrar, A., & Afzal, M. (2012). Credit Risk and Shareholders’ Value in a Developing Economy: Evidence from Pakistani Banking System. Journal of Economics and Behavioral Studies, 4(2), 87-95. https://doi.org/10.22610/jebs.v4i2.306

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Section

Research Paper

Published in

Vol. 4 No. 2 (2012) Experiments, Banking Risk & Euro Zone Futures View issue contents

Published

2012-02-15

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