Degree
Master of Science in Finance
Department
Department of Finance
School
School of Business Studies (SBS)
Date of Submission
Summer 2025
Supervisor
Dr. Irum Saba, Associate Professor & Program Director MS-IBF, Institute of Business Administration, Karachi
Project Type
Thesis
Document Type
Restricted Access
Pages
x, 63
Keywords
Exchange, Finance, Banks, Fluctuation, Pakistan
Abstract
This paper assesses how the performance of commercial banks in Pakistan is influenced by exchange rate changes in its performance and profitability. Moreover, it examines how the policy of exchange rates, risk management, foreign investment, and bank performance indicators namely net interest income, asset quality, as well as equity, are associated with each other in the context of the shift of the jurisdiction of Pakistan on the path of the flexible exchange rate regime and the latest State Bank of Pakistan regulatory interventions. A quantitative approach is chosen with the usage of panel and time-series data of 2010-2022 in ten largest commercial banks in Pakistan. The empirical test shows that the exchange rate volatility is fairly related to parameters based on significant performance such as non-performing loans (NPLs), foreign currency exposure and stock returns. The results support the fact that effective risk management measures, regulation adaptation, and real-time data usage help in reducing the exchange rate risk and increase financial stability. This study is useful in addressing some of the gaps since the study is timely as it presents a review of the impact of exchange rate policy on the performance of commercial banks in Pakistan.
Recommended Citation
Nasir, M. (2025). Impact of exchange rate fluctuation on the performance and profitability of commercial banks of Pakistan (Unpublished master's thesis). Retrieved from https://ir.iba.edu.pk/research-projects-msfin/18
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