Since the global financial crisis (GFC), the regulatory authorities are preoccupied in addressing the financial sector’s stability by using macroprudential approach instead of microprudential approach as the earlier provides a holistic diagnosis as well as the treatment for systemic exposures by developing certain instruments that will help in preventing the financial crisis. The comprehensive approach, macroprudential policy determines the extent to which the activities of each financial institution endow the current macroeconomic situation the behavior of other financial institutions, and the relationships between them. The risk of the bank is measured by the non-performing loan ratios which is then regressed on the macroeconomic variables such as policy rate, term premium and GDP and the macroprudential tools such as LTV caps and general capital requirement. We used system GMM for panel data from 2009 to 2018 for listed private and public banks of Pakistan to check whether the macroprudential policies are effective in case of Pakistan or not. LTV and CAR both are effective for public and private banks but LTV is more effective in case of private banks. Therefore, the regulatory authorities must consider the implementation of macroprudential policy in mitigating the bank risk and enhancing the resilience of the financial sector. Supervisor:- Dr. Ahsan ul Haq Satti