Macroeconomic Factor Affecting Non-Performing Loans (NPLs): Evidence from Commercial Bank in Pakistan Based ARDL Cointegration Approach


  • Muniba Ghaffar M.Phil Scholar, Superior University Lahore, Pakistan
  • Mirza Aslam Baig M.Phil Scholar, Superior University Lahore, Pakistan.
  • Shahzad Ali Faculty of Management Sciences, Superior University Lahore, Pakistan.



Inflation, Corruption, interest rate, unemployment, GDP, NPL


The main objective of this study is to measure the NPLS in Pakistan’s commercial bank. The macroeconomic factor of Country GDP, corruption, unemployment, political instability and inflation it’s nettle the level of NPLS in commercial bank in Pakistan.  The unemployment, increasing of interest rate, low economic growth and money laundering they elaborate the changing in NPLS. high inflation, unemployment ratio, huge cases of corruption, political instability are faced by the country.we are working time series data of Pakistan from 1972 to 2022 by using ARDL long and short run. We find that there is long run relationship exist between the variables, and co-integration also have positive and significant impact on NPLS.
The observation of this study shows that efficiency of managing the productivity had important effects on NPLS. The policy maker should be establishing the steps for creditors to ensure superb loan management and they will grant to the banks. If the better steps for loan will be establish then the bank will be stable and so their works efficiently. The Finding shows that GDP has positive/negative and significant impact on NPLS of commercial banking in Pakistan in long run/ short run. However, corruption has positive/negative and insignificant impact on NPLs in long run/ short run, we also find that inflation has negative and significant impact on NPLs in long run/short run, we also observed that interest rate has negative and significant impact on NPLs in long run/short run.