Khan, Imran and Khan, Mehreen and Tahir, Muhammad,(2017), Performance comparison of Islamic and conventional banks: empirical evidence from Pakistan. , International Journal of Islamic and Middle Eastern Finance and Management, UNSPECIFIED
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Abstract
Purpose – This study aims to investigate the performance differences of Islamic and conventional banks in
Pakistan by using financial ratios.
Design/methodology/approach – This study analyzed 5 Islamic and 19 conventional banks for the
periods of 2007-2014. Two types of analyses were performed – sample t-test and logistic regression. Analysis
was also performed on sub-sample considering crisis effects.
Findings – It was found that Islamic banks are relatively better in profitability, efficiency, risk and liquidity
management, while conventional banks are superior in asset quality. Higher efficiency of Islamic banks
contradicts with previous studies conducted in Pakistan. Probable reasons for this include phenomenal
expansion of Islamic banking industry and its broad appeal to customers in Pakistan. Risk management
practices of Islamic banks are superior to conventional banks, as Shariah rules restrict pure speculation in
monetary terms. Better asset quality of conventional banks is attributed to their recognition and product
diversity. During the crisis, Islamic banks were found less profitable than their counterparts.
Research limitations/implications – This study suggests that high operational efficiency of Islamic
banks should be converted into technical efficiency by improving human resource, introducing innovative
market-oriented products and prudent resource allocations. As operational efficiency does not promise
returns in long term, to sustain ongoing phenomenal growth of Islamic banking, management needs to gain
customer trust.
Originality/value – This is an original research that compares performance differences across Islamic and
conventional banks by using financial ratios.
Keywords : | Pakistan, Islamic banks, Financial ratios, Logit regression, UNSPECIFIED |
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Journal or Publication Title: | International Journal of Islamic and Middle Eastern Finance and Management |
Volume: | 10 |
Number: | 3 |
Item Type: | Article |
Subjects: | Ekonomi Islam |
Depositing User: | Users 15 not found. |
Date Deposited: | 30 Dec 2019 02:37 |
Last Modified: | 30 Dec 2019 02:37 |
URI: | https://repofeb.undip.ac.id/id/eprint/1137 |