Abstract:

Commercial banking industry is the backbone of financial sector of Pakistan. As of Feb 2017, there are seventeen private banks and five public banks operating in Pakistan. Despite indirect support of the government to public banks, private banks are more efficient than pubic banks. This study analyzes the factors of profitability of public commercial banks of Pakistan for the period 2004-2013, using panel data analysis techniques. The research analyzes both microeconomic as well as macroeconomic factors. Profitability of the banks is determined through return on assets. Microeconomic independent variables include liquidity, efficiency, asset quality, size, total debt to total assets and capital adequacy. Macroeconomic independent variables include gross domestic product, inflation and interest rate