Banks Specific Variables and Sustainable Performance of Banks in Pakistan

Abstract

The banking industry is essential to the modern economy, and the prosperity of growing nations is closely associated with the banking industry's performance. Sustainable finance research needs to be more comprehensive and addressed in the banking sector, especially in poor nations. This research aims to empirically investigate the impact of bank-specific variables on the sustainable performance of banks in Pakistan through bank size, loan intensity, financial leverage, and credit risk. This study uses mainly quantitative methods using time series data of five years from 2016 to 2021 about Pakistani banks analyzed using E-Views. A correlation test was applied to test the association among the variables, and the OLS panel method was used to test the study hypotheses using the fixed-effect model and the random-effect model. The results suggest that bank size, loan intensity, financial leverage, and credit risk significantly impact the sustainable performance of banks. The outcome of the study supports banking sector management to focus on sustainable performance to achieve banks' sustainability. Most of the literature showed recommendations to check banks' internal variables, such as bank size, loan intensity, and credit risk, except financial leverage, on the sustainable performance of banks. Banking sector sustainability will improve education, health, manufacturing, construction, and tourism in Pakistan, improving society wellbeing.