AI Article Synopsis
- The article analyzes data from 15 banks in Pakistan over 12 years, focusing on how specific bank risks affect financial stability.
- It finds that credit risk and liquidity risk negatively impact bank stability, while funding risk does not significantly affect it.
- Additionally, larger bank size is linked to lower stability, whereas better return on assets (ROA) contributes positively; banks should manage loans and customer deposits carefully to enhance stability.
Article Abstract
This article investigates the nexus between bank-specific risks and the financial stability of the banks for a panel data set of 15 scheduled banks in Pakistan over a 12-year period from 2009 to 2020. Using the fixed-effect model, the study result shows that bank-specific risks, i.e., credit risk and liquidity risk are detrimental to bank stability, whereas funding risk has no significant impact on bank stability. Besides these, bank size has also a negative impact on bank stability, whereas the return on assets (ROA) revealed a positive influence. To ensure stability, bank management should establish policies that confirm secure loan granting and timely reimbursement from customers to minimize the credit risk. Besides this, management should keenly observe the liquidity position and should also effectively mobilize the customer deposits to attain financial stability.
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Source |
|---|---|
| http://www.ncbi.nlm.nih.gov/pmc/articles/PMC9263592 | PMC |
| http://dx.doi.org/10.3389/fpsyg.2022.909141 | DOI Listing |
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