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Evaluating the Role of Bank Specific, Macroeconomic, and Institutional Factors in Determining Banking Sector Performance: Evidence from South Asian Economies

Author

Listed:
  • Samia Nasreen

    (Lahore College for Women University, Lahore, Pakistan)

  • Mehwish Gulzar

    (Government of the Punjab, Pakistan)

  • Xuan-Hoa Nghiem

    (Vietnam National University, Hanoi, Vietnam)

  • Saira Arsh

    (Lahore College for Women University, Lahore, Pakistan)

Abstract

This study investigates the bank-specific, macroeconomic, and institutional factors affecting the performance of the banking sector specifically profitability and stability in South Asian countries from 2011 to 2020. Using a two-step system GMM estimation method on a balanced panel dataset, the study identifies key determinants, including bank size, operating expenses, economic growth, exchange rates, and economic freedom. Institutional factors, particularly corruption, significantly influence banking sector profitability and stability. The findings offer several policy recommendations to enhance banking sector performance in the region.

Suggested Citation

  • Samia Nasreen & Mehwish Gulzar & Xuan-Hoa Nghiem & Saira Arsh, 2026. "Evaluating the Role of Bank Specific, Macroeconomic, and Institutional Factors in Determining Banking Sector Performance: Evidence from South Asian Economies," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 29(1), pages 77-96, February.
    • Handle: RePEc:idn:journl:v:29:y:2026:i:1d:p:77-96
    DOI: https://doi.org/10.59091/2460-9196.2250

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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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