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Title Factors Determining Performance of Banks: A Comparative of Islamic and Conventional Banking Firms in Pakistan

Author(s) MUDASSAR RAUF

Abstract Title: Factors Determining Performance of Banks. A Comparative Analysis of Islamic and Conventional Banking Firms In Pakistan Islamic Banking (IB) industry is considered as an attractive substitute to the Conventional Banking (CB) system. The sustainability promised by the IBs and the recent experience of the economies with the conventional banking system has placed the Islamic Bank industry in a more substantial position to penetrate and consolidate in the industry. The IBs have presented new business techniques, product lines, risk mitigation tools and ways of business that are different from techniques prevailing in conventional Banking system. There is much debate on the comparative advantages of IBs over the CBs yet to mark a clear line between the two. This study conducted to compare and analyze the performance of CBs and IBs in Pakistan in order to determine the different performance measures of these banks in Pakistan. In order to examine the factors, determine the profitability of banking sector in Pakistan, the study collected data for 10 different banks which included 5 banks each from IB sector and CB sector of Pakistan. Data for all the variables under analysis was collected for a period of 7 years from 2010 to 2016. The data was then analyzed using multiple regression analysis technique and Independent Sample T test. The results of the regression model suggest that Assets Quality, Management Quality, Capital Adequacy and earning quality are important determinates of performance of the banking firms in Pakistan. All these variables have significant association with the ROE, ROA and NIM as used by the study as the dependent variables in the analysis. The overall results of the test implies that in terms of the earning or performance, the CBs has an edge over the IBs and all the performance measures i.e. ROA and ROE are higher for CBs as compared to IBs. The IBs has performed well in terms of the Profit, Management Quality, Assets Quality and Capital Adequacy as compared to the CBs in the analysis. The CBs however have a higher Liquidity and Earning quality as compared to IBs. Key Words: Islamic Banking, Conventional Banking, Return on Equity, State Bank of Pakistan

Type Thesis/Dissertation MS

Faculty Management Sciences

Department Management Sciences

Language English

Publication Date 2020-01-23

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