Bank-Specific and Macroeconomic Indicators of Profitability - Empirical Evidence from the Commercial Banks of Pakistan
Khizer Ali, Muhammad Farhan Akhtar, Prof. Hafiz Zafar Ahmed

Abstract
Purpose - The purpose of the study is to examine the profitability indicators of public and private commercial banks of Pakistan explored in 2006-2009. Design/methodology/approach - The return on assets (ROA) and return on equity (ROE) are used as profitability measures to determine the affect of bank-specific and macroeconomic indicators on profitability. The descriptive, correlation and regression analysis results are derived with the help of SPSS. Findings - The efficient asset management and economic growth establish positive and significant relation with profitability in both models (measured by ROA & ROE). The high credit risk and capitalization lead to lower profitability measured by return on assets (ROA). The operating efficiency tends to exhibit the higher profitability level as measured by return on equity. Research limitations/implications - The technological changes over the time and changes in productivity of macroeconomic and bank specific dimensions could yet be another extension to study. The study is beneficial to banking sector to overcome the ambiguities. Originality/value - The main objective of the study is providing empirical evidence on indicators of profitability in case of Commercial Banks of Pakistan to fill a demanding gap in the literature.

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