Financial Leverage and Its Impact on Profit Margin in Pakistan’s Textile Industry

The core purpose concerned in this study remains to explore the impact of the financial leverage on the stitched textile industry, and mainly on the profit margin. The textile industry in Pakistan is said to be the largest manufacturing industry and so is the stitching industry increasing with the great importance of readymade dresses especially among females. The objective set in this study remains to study the relationship between the Financial Leverage (FL) and the Profit Margin (PM). This further includes the proving of the idea that the stitched industry becomes more profitable as soon as the financial leverage has been adopted by the companies. The data from 10 Stitched-Textile companies has been gathered as a sample in this study, from the period of 2012 to 2015 for data analysis. The tools used for data analysis comprised of descriptive analysis, correlation analysis,and regression analysis. The results from this analysis conclude that in the stitching industry there is no significance recognition but positive impact on the FL by the PM. Therefore, it is being recommended that the best possible use of the FL should be made by the stitched industry in order to achieve the target of becoming the most profitable industry of Pakistan Textile Industry. Furthermore, it could be noted that the optimum increase in the production of the textile industry would help in minimizing the level of poverty in Pakistan and also building a healthy population. Keywords: Financial Leverage; Profit Margin, Stitched-Textile Industry, profitability. DOI: 10.7176/EJBM/11-12-13 Publication date: April 30th 201

THE IMPACT OF THE BASEL III CAPITAL REQUIREMENTS ON THE PROFITABILITY AND LENDING BEHAVIORS OF GLOBAL SYSTEMICALLY IMPORTANT BANKS

The global financial crisis prompted a period of widespread regulatory changes geared towards creating a safer financial system. The Basel III regulation emerged post-crisis and adjusted the minimum capital requirements for banks, attempting to ensure that they would be better equipped to absorb losses in the case of the next potential crisis. Advocates of this regulation believe that our financial system is far safer when these higher capital requirements are in place, and some advocates believe these requirements should be even higher. On the other hand, critics of this regulation argue that as a result of these requirements, banks profit less and their lending behaviors are impacted negatively. The research question of this thesis was formed as a response to these critics and asks: What effect do the Basel III capital requirements have on bank profitability and lending behavior. This thesis uses a regression analysis to determine whether these capital requirements have had an impact on the profitability and lending behaviors of global systemically important banks.Bachelor of Scienc

The impact of capital adequacy requirements on loan pricing : the case of South African Commercial Banks

Capital adequacy requirements are viewed as an important form of regulation within the banking sector and they represent a major change in banking regulation. The capital accord is a globalised regulation which seeks to reduce banking failures and achieve a stable and efficient financial system for the growth of the global economies. Through the adoption of the capital adequacy requirement in the South African banking system as well as having internationally active financial institutions, the South African economy is no exception to the benefits ensued by this regulation to the global economies. In light of this, this study examined the impact of capital adequacy requirements on loan pricing of South African commercial banks, using quarterly time series econometric analysis over the time period 2000-2016. The study used interest rate on loan, the dependent variable as a measure of loan pricing and the following independent variables: risk of default, market structure, Treasury bill and capital adequacy ratio. To confirm the level of integration, the study employed the Augmented Dickey-Fuller and Phillips-Perron tests. The Johansen co-integration and the Vector Error Correction Model were employed to obtain long-run and short-run coefficients. The findings of this study show that the measure of capital adequacy requirements CCAR is negatively related to real interest rate on loans CRL. This agrees with theory and expected priori. In addition, past studies in the developing countries’ context support these findings. Estimation of results reveals that all other variables such as market structure CMS, Treasury bill rate TB and loan loss provisions GLLP have a positive impact on interest rate on loans