Syed Faizan Ul HassanCIIT/SP24-RBA-016-LHRImran-ur-RehmanLHR TP 100942026-05-182025https://repository.cuilahore.edu.pk/123456789/3923The profitability of commercial banks is important in the financial stability and could contribute to the economic growth, especially in emerging economies like Pakistan. This research paper focuses on the determinants of bank profitability in Pakistani commercial banking industry whereby the effects of both internal factors within the bank as well as the effects of the chosen macroeconomic variables are analyzed. The proposed research paper applies the method of a quantitative research design based on the approach of a balanced panel on the sample of the top seven commercial banks in the United Arab Emirates, namely, the United Bank Limited, Muslim Commercial Bank, Askari Bank, Faysal Bank, Bank of Punjab, and Meezan Bank over the years (2018-24). Return on Assets (ROA) and Return on Equity (ROE) are used to measure the profitability of banks. The independent variables are credit risk, operational efficiency, capital adequacy, bank size, GDP growth and inflation. The panel data regression methods are used to gauge the correlations among the variables. The empirical results respond that operational efficiency is the most influential factor that has a strong negative influence on both ROA and ROE. The impact of credit risk on profitability is negative, which is statistically significant and larger on ROE, indicating its negative influence on profits of shareholders. Capital adequacy has a negative relationship with ROE implying that increasing the capital base could dilute equity returns even though capital base increases financial stability. Bank size has a positive impact on the ROE, which shows that bigger banks have scale benefits. Conversely, the statistically significant implication of GDP growth and inflation on bank profitability over the course of the study is not found. In general, the paper finds that internal bank specific variables are more decisive to the profitability than the macroeconomic factors. The research findings are useful to both the bank management and regulators especially the State Bank of Pakistan in the development of policies that will help improve efficiency, improve risk management.enDepartment of Management SciencesSP24Management SciencesFinancial performanceCommercial banksPanel data analysisBank-specific factorsImran-ur-RehmanThesis