Abstract
This study examines the effect of credit risk on shareholder’s wealth. Scheduled banks of SBP were taken as statistical frame. The results of the study indicate that overall credit risk has insignificantly and negatively effect on shareholders wealth; similarly indicator of credit risk such as ratio of non-performing loan to gross advance and provision allocated for non-performing loan and actual non-performing loans influence the earring per share and return on equity in significant manner. The non-performing loans has emerged like as the major indicator of credit risk as consequence of the finding of the study, whereas earring per share, return on equity and return on revenue are effective indicators of the wealth of shareholders. These results does matter categorically the banking sector in Pakistan as a developing country of South Asia where such practices are not very common.
Shahzad Ahmad Khan, Muhammad Ahmad, Iftikhar Hussain Adil, Talha Shawkat. (2018) Shareholder’s Wealth perspective of Credit Risk: Evidences from Banking Sector of Pakistan, Pakistan Business Review, Volume 20, Issue 3.
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