The Effect of CRM and Capital Adequacy on the Financial Performance of Pakistani Banks

This paper explored the effect of credit risk management (CRM) and capital adequacy on the financial performance of Pakistani banks. CRM is measured by Cost Per Loan Assets, Loan Loss Provisions ratio, Default Rate Ratio, and Loan & Advances. Banks' performance was captured by their Return on Equity. 10 Years of data was5taken from 2008 to 2017 of All Pakistani Private Banks. The results suggested that Cost Per Loan Assets, and Default Rate Ratio seems to have a significant negative impact on banks' performance. Whereas Loan & Advances, and Capital Adequacy ratios seem to affect performance positively. This exploration will help to understand how to safeguard the credit risk, and the banks who are already deploying the techniques, will be able to secure the techniques more, for the safety of their credit.