Determinants of Interest Margin in Pakistan: A Panel Data Analysis

Round 1

Reviewer 1 Report

The paper is focused on determinants of net interest margin. I find the main idea all right. However, I think that the objective of the paper (research) should be defined clearly. There is just described the structure of the paper, but not the aim of it. The literature review is based on sufficient number of sources. The trouble is that the majority of them are a little bit old. The authors use sources from 1945, 1967, 1971 and others. Just one source (Salam and Nishiyamn, 2016) is form 2016. Others are older. Some sources are not mentioned among references (for instance page 8: Salam and Nishiyamn, 2016). Other sources (for example: Barajas, A., Steiner, R. and Salazar, N., 1998. Interest spreads in banking: costs, financial taxation, market power, and loan quality in the Colombian case 1974-96.) are mentioned among references, but not cited in the paper. The theoretical model is described clearly. Methodology and data are also all right. The results correspond to the methodology. The findings are clear and validate claim of other authors. The recommendation is clear but a little bit general: “it is suggested that operating cost must be reduced by adopting efficient

340 banking technologies and improving managerial practices.” The target is shown, but not the way.

I suggest to:

• revise the literature review (Use newer sources. Correct the mistakes, you made.)
• be more exact with your recommendations.

Author Response

Response Sheet to reviewer

We are grateful to you for review of our research work, and pointed out weaknesses in the paper. This correction will improve and refine our paper. Therefore, we have tried our best to remove these mistakes.

Comment #1: The paper is focused on determinants of net interest margin. I find the main idea all right. However, I think that the objective of the paper (research) should be defined clearly. There is just described the structure of the paper, but not the aim of it.

Response : Now we have mention the objective and contribution of the paper in the lines from 69 to 72, and as well as in the conclusion of the study.

Comment # 2: The literature review is based on sufficient number of sources. The trouble is that the majority of them are a little bit old. The authors use sources from 1945, 1967, 1971 and others. Just one source (Salam and Nishiyamn, 2016) is form 2016. Others are older. Some sources are not mentioned among references (for instance page 8: Salam and Nishiyamn, 2016). Other sources (for example: Barajas, A., Steiner, R. and Salazar, N., 1998. Interest spreads in banking: costs, financial taxation, market power, and loan quality in the Colombian case 1974-96.) are mentioned among references, but not cited in the paper. The theoretical model is described clearly.

Response : The missing sources have included in references, and those papers were absent in main text, now included in the paper. In addition, we have also extended the literature by including recent papers.

Comment # 3: “it is suggested that operating cost must be reduced by adopting efficient 340 banking technologies and improving managerial practices.” The target is shown, but not the way.

Response: we elaborated this sentence. 

Reviewer 2 Report

I thank this prestigious journal for the opportunity to review this interesting manuscript. I really liked this research. I would like to suggest some improvements that I think will make this paper of a better quality:

- Authors should delete the Appendix section and include Table 1 in the text.
- On line 195 you should write Table 1 and not simply table. Do not use footnotes for this.
- The information in table 2 should be better focused on each column and in the first column correct the small error where you write: VARIABLESLag of NIM.
- Order the information that appears in the Conclusions chapter, gathering the following information: theoretical contributions, practical contributions, limitations of the study and future lines of research.

Author Response

Response Sheet to reviewer

We are grateful to you for review of our research work, and pointed out weaknesses in the paper. This correction will improve and refine our paper. Therefore, we have tried our best to remove these mistakes.

Comment #1: Authors should delete the Appendix section and include Table 1 in the text.
- On line 195 you should write Table 1 and not simply table. Do not use footnotes for this.

Response: We have included the table 1 in the main text.

Comment #2: in the first column correct the small error where you write: VARIABLES Lag of NIM.

Response: corrected this mistake.

Comment #3: Order the information that appears in the Conclusions chapter, gathering the following information: theoretical contributions, practical contributions, limitations of the study and future lines of research

Response: We have mentioned this information in the conclusion.