Comparison of profitability indicators of commercial banks: The case of Malaysia and Pakistan

ABSTRACT: The main driver of an economy as a whole is a banking system; the government intervenes into the economy by using banking sector, so profitability determinants of the banking system need to be evaluated. The aim of this study is to compare empirically and measure financial performance of commercial banks in Malaysia and Pakistan for the period of 2006-2011. In this paper macroeconomic variables will be used as well as financial ratios which are based on the CAMEL approach. Tufan (2008) and Hamrat (2008) found that foreign banks outperform domestic ones. To evaluate empirically most commonly used ratios will be employed in this study. Two profitability determinants are used as dependent variables. Furthermore data is checked for robustness of the model and OLS methodology is applied by adopting Eviews program. For this purpose, many banking literatures were studied to form an appropriate model. Keywords: Commercial Banks, Malaysia, Pakistan, CAMEL Approachiv. …………………………………………………………………………………………………………………………………………………………………………………………………………