Impact of Liquidity on Profitability of Commercial Banks in Pakistan: An Analysis on Banking Sector in Pakistan

Abstract

This study aims at investigating the relationship between liquidity and profitability of commercial banks in Pakistan. The main objective of the study is to find the nature of relationship and the strength of relationship exist between the variables. Correlation and regression are used respectively to find the nature of the relationship and extent of relationship between dependent and independent variables. Secondary data was used for analysis which was extracted from the last five years (2008-2014) annual accounts of Habib Bank Limited. After conducting correlation and regression analysis it was found that there as significant positive relationship between liquidity with profitability of the banks. Since, the data of the banking sector was used, hence the results cannot be generalized to other sectors.