ABSTRACT

The objective of this research study is to investigate the relationship between growth and size through the validation of Gibrat’s law. A sample of 17 commercial banks of Pakistan used for the period 2005-2020. The estimation method used is that of quantile regression for panel data; the results suggest that small banks grow faster than their larger counterparts do. The results show that size and growth have non-linear inverted U-shaped relationship. Furthermore, GMM method of estimation has been used as robustness check. Finally, it has been found that growth of Pakistani banks is not independent of banks size and so does not match to a random process. Similarly, macroeconomic indicators have their influence on the growth of the banks.