Report of BRM

Submitted To,
Dr. Harris Malik
Submitted By,

∑ MUHAMMAH Shahid MBKE-18-03

∑ Zeeshan Rafiq MBKE-18-08
∑ Maham Zahra MBKE-18-16
∑ Sharjeel Habib MBKE-18-18
∑ Talha Farooq MBKE-18-22
∑ Shehzad Mehboob MBKE-18-26
∑ Abbas Ali Khan MBKE-18-28

Program
MBA (banking & finance) E
4th Semester

Institute of Banking & Finance (BZU)

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 Executive summery
This research is on public banks. This research has two parts one is primary research and
other is secondary research.

In first (primary research) we check the impact of service quality on employee motivation
and profitability. Then we analyze with the help of SPSS software and we get the positive
relationship between service quality and employee motivation. And also get positive
relation between service quality and employee motivation.

In second (secondary research) we get the data between 2015-2017. This data was five
(5) public banks. For secondary research we use STATA software. We analyze the
profitability of the banks that on which variable bank's profitability is dependent.

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 Table of contents
Content

Executive summary……………………………………………………………………....2

Chapter # 1……………………………………………………………………………….4

Introduction………………………………………………………………………4

Research objective………………………………………………………………...5

Research methodology…………………………………………………………....5

Analysis…………………………………………………………………………...8

Findings ……………………………………………………………………….....11

Limitations………………………………………………………………………..12

Recommendation …………………………………………………………...…....12

Chapter #2 ……………………………………………………………………………….13

Introduction……………………………………………………………………... 13

Analysis …………………………………………………………………………..14

Finding …………………………………………………………………………...16

Limitations…………………………………….……………………………….…17

Recommendation…………………………………………………………..……..17

References…………………………………………………………….……………….….18

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 Chapter# 1
1. Introduction
An institution that deposits and receives loans, cheque, and holds license by the central bank.
This is called a bank. Bank provides the services to their customer. There are two kinds of bank:

1. Public banks
2. Private banks

A public bank is a bank, a financial institution, in which a state, municipality, or public actors
are the owners. It is an enterprise under government control. In the public bank the government
holds 51% share and other 49% share holds public investors.

A private bank is a bank which the state has no any kind of share. This is the private bank.
Totally shares are owned by the general public. But we are totally focusing on public banks in
this report. This research based on the four (4) variables: Service quality(SQ) , Organizational
performance (OP) , Allowances(reward) , employee motivation(EM). Banks are totally focus on
their services. Services quality Is directly proportional to the EM and OP. when a bank provide
good services then customers more interact to the bank and also invest, deposit to the bank.
Then bank earn more profit and provides the allowance/reward to employees. Then employees
work happily and perform good. So therefore banks increase their profit day by day. To measure
the organizational performance we get scale from the article of Sabah Agha, Laith Alrubaiee,
Manar Jamhour (2012).

In banking sector service quality is important to provide high level of customer satisfaction and
and get the competitive advantage (Ahmossawi, 2001).In addition, service quality has a
significant impact on a bank’s success and performance (Mouawad and Kleiner 1996).Service
quality has received much attention because of its obvious relationship with costs, financial
performance, customer satisfaction, customer retention, and employee satisfaction (Mesay Sata
Shanka, 2012).The most widely used models in measuring service quality in the banking sector
are the SERVQUAL and SERVPERF models. SERVPERF measures service quality by on the
behalf of the customers thinking(Cronin and Taylor in 1992). Mesay Sata Shanka in 2012 use
the same scale to measure the service quality. In this study, the same scale is used to measure to
service quality.

Motivation is also important for career development like employee's intelligence, job knowledge
and skills, and time management ability.(Wong et al., 1999). Pay, monetary rewards,
opportunity for advancement and promotion have been examined in motivation (Byrne, 1986;
Wong et al., 1999). Job responsibility, recognition from people, job challenge, and feelings of
accomplishment and development of self-esteem are also other motivation factors that is
important to identified for employees (Wong et al., 1999).Banks management knows the
importance of employee motivation and this is also important for the employees. Employee

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motivation will impact directly or indirectly on employee performance and service quality
(Chun-Fang Chianga,, SooCheong (Shawn) Jang ,2008). This research model also can be
applied to motivate individuals at the managerial level. We uses the same scale for measuring the
employee motivation that is used by Chun-Fang Chianga,, SooCheong (Shawn) Jangb in 2008.

Employee will be motivated with high reward and give effective performance. And also high
performance based on high reward vice versa (Muhammad Ibrar, Owais Khan, 2015).
Management use rewards for employees motivations (Muhammad Ibrar, Owais Khan, 2015).
Employee use energy for the organization to perform to provide the best quality of services. The
strong relationship between rewards, motivation and job satisfaction of employees is necessary
for the success of public and private sectors (Schuler and Jackson (1996)). Financial and non-
financial reward are essential for the employee and its satisfaction level of work (Dewhurst,
2010).Financial reward mostly consist on pay for performance such as job promotion, bonus,
commission, gifts etc and nonfinancial rewards mostly consist on social recognition,
appreciation, work kind condition, meaning full work responsibility etc. (Luthans,2000).
Rewards increase overall satisfaction of employees (Neckermann and Kosfeld (2008)).
Employee will give their maximum when they have a feeling or trust that their efforts will be
rewarded by the management (Dewhurst (2010)). So, an organization must carefully set the
rewards system to evaluate the employee’s performance at all levels. We get the scale of reward
from the article of Muhammad Ibrar, Owais Khan(2015)

2. Research objective
The main objective of this research basically to elaborate the relationship between
the service quality and employee motivation. That how it works. The employees of the bank
wants higher allowances and on the other-hand bank wants to increase its profit.

∑ Test the effect of service quality on employee motivation

∑ To investigate the effect of service quality on organizational performance

3. Research Methodology
Sampling Design

We do research on four variables: Service quality, Profitability, Allowances , Employee

motivation. Our research model is:

Service Quality Allowances Employee Motivation

Profitability
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Questionnaire

This questionnaire is measured on 5 likert scale

Strongly Agree Strongly Agree

1 2 3 4 5

Service Quality
1. The bank has modern looking equipment.
2. The bank's physical features are visually appealing.
3. The bank's reception desk employees are neat appearing.
4. Materials associated with the service (such as pamphlets) are
visually appealing at the bank.
5. When the bank promises to do something by a certain time, it
does so.
6. When you have a problem, the bank shows a sincere interest in
solving it.
7. The bank performs the service right the first time.
8. The bank provides its service at the time it promises to do so.
9. The bank insists on error free records.
10. Employees in the bank tell you exactly when the services will
be performed.
11. Employees in the bank give you prompt service.
12. Employees in the bank are always willing to help you.
13. Employees in the bank are never too busy to respond to your
request.
14. The behavior of employees in the bank instills confidence in
you.
15. You feel safe in your transactions with the bank.
16. Employees in the bank are consistently courteous with you.
17. Employees in the bank have the knowledge to answer your
questions.
18. The bank gives you individual attention.
19. The bank has operating hours convenient to all its customers.
20. The bank has employees who give you personal attention.
21. The bank has your best interests at heart.
22. The employees of the bank understand your specific needs

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23. Overall, I am satisfied with the bank services
24. I say positive things about the bank to other people.
25. I intend to continue being a customer of the bank for a long
time to come
26. I will encourage friends and relatives to use the service offered
by the bank.
Organizational performance(profitability)
27. The return on corporate investment position relative to our
principle competition
28. My satisfaction with the return on corporate investment.
29. My satisfaction with the return on Sales.
30. The net profit position relative to our principle competitor.
31. The financial liquidity position relative to our principle
competitor.
Employee Motivation
32.When I am motivated, I will expend more effort on the job
33.When I am motivated, I will enhance quality of my job
performance
34. When I am motivated, I will increase productivity on the job
35.When I am motivated, I will be willing to get involved in my
job
Reward( Allowances)
36. Allowances bring positive impact of employee performance
37. Due to the allowances , the bank achieve the target goal
38. Motivated Employees having lower the turnover intention
39. Pay decisions are linked to performance achievements?
40. The reward system facilitates implementation of strategy by
motivating desired levels of performance.
41. The reward system facilitates the implementation of strategy by
attracting and retaining the right kind of people
42. Performance goals are mutually developed and have specific
time frames

1. Sex:

Male ( ) Female ( )

2. Age:

18 to 30 ( ) 31 – 50 ( ) 50 and above ( )

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3. Educational level:

Intermediate ( ) Undergraduate ( ) Postgraduate ( )

4. Frequency of using the bank:

Daily ( ) Weekly ( ) Monthly ( ) Other: ___

4. Analysis
Frequency

Frequency Percentage
Gender 28 56
Male 22 44
Female 50 100
Total
Age 19 38
18-30 17 34
30-50 14 28
above 50 50 100
Total
Educational Background
intermediate 2 4
undergraduate 13 26
postgraduate and above 35 70
Total 50 100
Frequency of use
daily 4 2
weekly 11 22
monthly 21 42
other 14 28
Total 50 100

This table provides data on demographic characteristics of the respondents. It includes variables
like age, gender, educational qualifications, and frequency of use. We do frequency analysis of
gender, age, educational background and frequency of use in SPSS software, we merge all
analysis in this software.

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Histogram

Here we take one variable and make histogram chart to show public reaction on this question. In
this chart we see that most agree (4) that bank has modern equipment. Small quantity of public
disagrees with this question.

Cross Tabulation

gender * age Cross tabulation

Count
age Total
18-30 31-50 50 and above
gender male 9 9 10 28
female 10 8 4 22
Total 19 17 14 50

In cross tabulation table, 2 variables are analyzed. In this table we see that males mostly use the
bank because in Pakistan, males do business or job. In Pakistan 64 %( By Shakeel Ahmad,
Assistant Country Director and Chief of the Development Policy Unit, UNDP Pakistan, 24 July
2018) people is younger than age 30.so that’s why in this table we that youth that is in between
18-30 is more than other age group.

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Cross Tabulation with 3 variables

gender * age * Frequency of using the bank Cross tabulation

Count
age Total
Frequency of using the 50 and
bank 18-30 31-50 above
daily gender male 1 1 2
female 2 0 2
Total 3 1 4
weekly gender male 3 2 1 6
female 1 2 2 5
Total 4 4 3 11
monthly gender male 4 1 5 10
female 4 5 2 11
Total 8 6 7 21
other gender male 1 6 3 10
female 3 1 0 4
Total 4 7 3 14
Total gender male 9 9 10 28
female 10 8 4 22
Total 19 17 14 50

In this table cross tabulation analysis is done with three variables: age, gender and frequency of
use. This table shows that mostly people use the bank on monthly basis.

Descriptive Analysis

Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Service Quality 50 1 5 2.79 1.128
employee motivation 50 1 5 3.08 1.391
Allowance 50 1 5 3.13 1.195
Profit 50 1 5 2.90 1.082

This table shows the mean score and standard deviation of our main variables. Mostly peoples
give neutral remarks on service quality of public banks. It means customer is not so happy.

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 That’s why profit score is also low. But motivation score is high because public banks earn low
but he give allowance to his/her employee.

5. Findings

T-Test
In T-test for the significance of our result we see with t value our result is not significant because
t value is less than 2, and with the value of Sig. (2-tailed) our result also not significant because
here value is more than 0.05.

One-Sample Test
Test Value = 3
95%
Confidence
Mean Interval of the
t df Difference Difference
Sig. (2-tailed) Lower Upper
The reward system 0.545 49 0.588 0.100 -0.27 0.47
facilitates implementation
of strategy by motivating
desired levels of
performance

Independent Samples Test

t-test
for
Equality
of
Means
95%
Sig. Confidence
(2- Mean Std. Error Interval of the
t df tailed) Difference Difference Difference
F Sig Lower Upper
The reward system Equal 0.055 0.815 2.088 48 0.042 0.747 0.358 0.028 1.466
facilitates variances
implementation of assumed
strategy by motivating
desired levels of
performance

In independent samples test our result is significant with t value as well as Sig. (2-tailed) value.

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 Paired Samples Test
Paired Difference

95%ConfidenceIntervaloftheDifference

Std. Sig.
Std. Error (2-
Mean Deviation Mean Lower Upper t df tailed)
Pair 1 Allowances bring 0.240 1.673 0.237 -0.235 0.715 1.014 49 0.315
positive impact of
employee performance
- The reward system
facilitates
implementation of
strategy by motivating
desired levels of
performance

In paired samples test our result is not significant with t as well as Sig. (2-tailed) value.

Correlation

Correlations
Service Quality Employee Motivation Allowance Profit
Service Quality 1
Employee Motivation 0.036 1
Allowance 0.225 0.144 1
Profit 0.210 0.208 0.202 1

In this table we see service quality has positive relationship with employee motivation and profit.
This means if service quality increase then profit and employee motivation also increase. In
introduction section we also mention this. We also see profit and allowance has positive
relationship with employee motivation.

6. Limitation
Our research is limited to Pakistan public banks. In this research we take only one independent
variable (service quality), one dependent variable (employee motivation), one moderating
(profitability) and one mediating (allowance).

7. Recommendations
Recommendations for future researcher may take these variables for their research

∑ What is the impact of the banks management on banks profit or revenue, bank
performance?

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 ∑ We recommend that researcher also took customer intention as a dependent variable.

Chapter 2
1. INTRODUCTION
The financial sector is the backbone of Pakistan economy. Country economy growth is based on
the banking system and stock market liquidity (Levine and Zervos (1998).the efficiency of
public banks is too much low than the other private bank due to the government policies (Abbas
and Malik, 2008) and also interference of politicians in the public sectors (Omran, 2007). We
have seen that due to this reason some public banks faced loss and some faced less profit than
others or other years. The private bank is more efficient then public bank. This trend is also same
in other developing countries. Private bank performance is better than public bank (Jiang et al.
(2013).

In our study we use the data of public banks from since of 2015 to 2017. This study shows the
performance of public bank as a sector. According to state bank of Pakistan public sector hold
only 20.30% of the market share. The share of public sector is low but this sector is important for
the economy of Pakistan.

2. Research Methodology
Variables

Dependent variables
∑ Return on Assets (ROA) (Net profit / total Assets)
∑ Return on Equity(ROE) (Net profit / total Equity)
Independent Variables
∑ Size (Assets )
∑ Capitalization( Equity / Assets)
∑ Leverage (Liabilities / Assets)
∑ Liquidity (Cash or bank /Assets)
∑ Operation Cost (Operation expense / Assets)
∑ Age (number of year from incorporation)

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List of Banks

Sr. No Bank Name Abbreviation

1 National Bank of Pakistan NBP
2 Bank of Punjab BOP
3 Sindh Bank SB
4 Bank of Khyber BOK
5 First Women Bank FW

3. Analysis
Descriptive Statistics

Variable Obs. Mean Std. Dev. Min Max

ROA 15 0.006522 0.006546 -0.00959 0.011532

ROE 15 0.101194 0.104742 -0.12375 0.244801
CAP 15 0.085387 0.040986 0.04107 0.180224
LEV 15 0.905242 0.039942 0.812073 0.954227
LIQ 15 0.056223 0.015439 0.035749 0.088434
OPPCOST 15 0.024336 0.010031 0.015332 0.048462
SIZE 15 19.27983 1.560562 16.73439 21.58611
Age 15 3.114352 0.802813 1.526056 4.122284

In this table we find mean and standard deviation of dependent and independent variable. We
also find the minimum and maximum value of variables

One sample t test

t = -2.0e+02
Variable Obs Mean Std. Dev. [95% Conf.
ROA 15 0.006522 0.0065458 0.0028974 p = 0.000

Our Result is significant because our data mean is smaller than the Indian banks. And our t value
is also more than 2. Significant difference. Our result is significant with p and t value.

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Two group Mean comparison test

Column1 Column2 Column3 Column5 Column6

Group Obs Mean Std. Dev. [95% Conf.
SB 3 0.0845637 0.0079615 0.0647862
BOK 3 0.1509003 0.0316827 0.0721961
diff -0.0663366 -0.1187024
t = -3.517 P = 0.012
Now we do comparison test of 2 groups: SB and BOK. If we see the t value and p value then we
say that our result is significant.

Two sample Mean comparison test

Variable Obs Mean Std. Dev. [95% Conf.

ROA 15 0.006 0.006 0.0028
ROE 15 0.101 0.104 0.043
diff -0.094 -0.150
t = -3.493 P = 0.000
we do t-test of 2 dependent variable and our result is significant, because t value is more than 2 and p
value is less than 0.01.

Paired test

Variable Obs Mean Std. Dev. [95% Conf.

ROA 3 0.01 0 0.008
ROE 3 0.177 0.015 0.139
diff 3 -0.166 0.015 -0.205
t = -18.403 P = 0.001

We do paired test of NBP and we get significant result.

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 4. Findings

Correlation

Variables ROA ROE CAP LEV LIQ OPPCOST AGE SIZE

ROA 1
ROE 0.891*** 1
CAP -0.4627* -0.5287*** 1
LEV 0.3936 0.4537* -0.9733*** 1
LIQ -0.0667 0.0647 -0.2234 0.0583 1
OPPCOST -0.4906* -0.4925* 0.9022*** -0.9303* 0.1305 1
AGE -0.0122 0.2011 -0.2626 0.0979 0.6135** -0.0002 1
SIZE 0.5273** 0.5566** -0.8549*** 0.7349*** 0.5535** -0.6766*** 0.4161 1
*p<0.10,**p<0.05,***p<0.01

In this table get relation of variables. In this table we see that some variable has positive
relationship and other variable has negative relationship. The stars on the values show the
significant that how much our result is right.

Simple Linear Regression

ROA =0.619+.037SIZE
In simple regression our result is significant because our t value is greater than 2. And our model
is right because our F value is smaller then 0.05

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Multiple linear Regression

Variable ROA ROE

CAP -0.756 -9.173
(-1.6) (-0.97)
LEV -0.65 -7.338
(-1.73) (-0.97)
LIQ -0.38* -4.485
(-1.89) (-1.11)
OPPCOST 0.331 4.125
(-0.62) (-0.38)
SIZE 0.001 0.016
(-0.49) (-0.22)
AGE -0.004 -0.021
(-1.35) (-0.35)
Constant 0.65 7.428
(-1.47) (-0.38)
F 2.84* 1.3*
Adj R-squared 0.44 0.115
N 15 15
*p<0.10,**p<0.05,***p<0.01 ,T value are in parentheses

Regression analysis shows relationship between dependent variable and multiple independent
variables. In above table we show the coefficient and t value.

5. Limitation

∑ Limited to public banks

∑ Limited to bank specific independent variable

6. Recommendation
When future researcher did research on this variable we recommended that he also takes
Macroeconomic variable like GDP, inflation result, interest rate. Because with these variables we
analyze that how these variable impact on profitability

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References
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Bahrain: an empirical analysis. Int. J. Bank. Mark. 19(3): 115-125.
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∑ Sabah Agha, Laith Alrubaiee, Manar Jamhour (2012)
http://dx.doi.org/10.5539/ijbm.v7n1p192
∑ Shakeel Ahmad(2018), Assistant Country Director and Chief of the Development
Policy Unit, UNDP Pakistan
∑ Wong, S., Siu, V., Tsang, N., 1999. The impact of demographic factors on Hong
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