Research and development activity initiates and promotes new production, increase knowledge level, and introduces new techniques of technology implementation and production. The current study presents and unveils the diversifying behavior of variables affecting the performance of banking sector and R&D investment association. cross sectional fixed effect model and random effect model utilizing ordinary least square methods were applied to secondary data collected from reliable sources of annual reports published by banks listed on Pakistan stock exchange and further such data was verified from state bank of Pakistan official sire .the data range from 2012-2017 and only 10 private banks were considered as sample size which were listed on Pakistan stock exchange. The intense literature guide that the performance of banks is affected by ROA, ROE, AND EPS. Furthermore Hausman test ass applied and it was concluded that when firmâ€™s performance is dependent variable then fixed effect is better and thee is relationship between R&D investment and performance of banks.
Key words: R &D Investment, Performance of banking sector, banking sector in Pakistan