IMPACT OF RECOVERIES OF NPLS ON PROFITABILITY OF BANKS IN PAKISTAN. A QUANTITATIVE RESEARCH ARTICLE

Abstract

The aim of this study is to investigate the impact of recoveries of non-performing loans (NPLs) on the profitability of banks in Pakistan. Using a sample of 20 banks over a period of five years from 2016 to 2020, this study employs multiple regression analysis to examine the relationship between recoveries of NPLs and bank profitability. The findings indicate that recoveries of NPLs have a positive and significant impact on bank profitability. Therefore, banks need to focus on recovering their NPLs to enhance their profitability. Moreover, the societal implications of NPL recoveries are considered, focusing on the effects on borrowers and the wider society. The study examines the potential benefits, such as reduced financial distress for individuals and improved access to credit for productive activities. It also explores any potential adverse consequences, such as social inequality or moral hazard that may arise from successful NPL recoveries. Overall, this research contributes to a deeper understanding of the impact of recoveries in NPLs. By examining the economic, financial, investor, and societal dimensions, it provides valuable insights for policymakers, financial institutions, investors, and other stakeholders, aiding in the formulation of effective strategies and policies to manage NPLs and foster sustainable economic growth. We especially thankful to our Supervisor Our Research Team is highly regarded for their expertise and dedication in the field of NPL research. His insightful contributions and guidance have significantly influenced the understanding and advancement of NPL management strategies. He is known for his polite and pleasant demeanor. Colleagues and students alike appreciate his exceptional mentorship and support, which have been instrumental in their professional growth. Our supervisor's presence brings a sense of warmth and encouragement, creating a conducive atmosphere for meaningful discussions and innovative thinking. Our Research Team is highly regarded for their expertise and valuable contributions in the field of research. His dedication and commitment to advancing knowledge in the area of NPLs have been commendable. With his vast experience and guidance, he has positively influenced the academic and professional growth of many individuals. Our Research Team's amiable demeanor and pleasant nature make a pleasure to work with, fostering a supportive and collaborative research environment.