The Association between Market risk, Exchange rate risks, Interest rate risk, and Accounting Variables: Evidence from Pakistani listed Banking Companies

This research paper has two objectives. First, to evaluate the market risk, exchange rate risk, and interest rate risk sensitivities (coefficients) of Pakistan listed banking companies. Second, it estimates the relationship between market measure of risk and corporate decision variables (accounting financial ratios). The data of market, exchange rate and interest rate risks on monthly basis while the date of accounting variables annuals basis. The span period of data is 2008 to 2018. The OLS econometric technique is used to find the result of this research. The result of first step shows that the market risk sensitivities are positively significant at 1% level for all banks in the sample while the exchange rate risk rare significant but the interest rate risk betas complete insignificant in all banks. So in second step only market risk sensitivities are regress with accounting variables. The accosting variables deposit of customer, investment and non-interest income significant at 5% and 10% level while the other variables insignificant. This study is helpful for banks' regularity authority, depositor, policymaker and as well as Government.