Performance Analysis of Islamic and Traditional Banks of Pakistan
DOI:
https://doi.org/10.31436/ijema.v27i1.589Keywords:
Performance, Islamic banks, Traditional banks, PakistanAbstract
This paper investigates the consequence of some CAMEL ratios, bank size, type of bank and governance structure on the financial performance of Banks. It also performs a relative analysis of Islamic and traditional banks of Pakistan. The comparative performance analysis is based on descriptive statistics and regression analysis. Fifteen traditional and two pure Islamic banks are selected for the analysis. The study period is from 2010-2017. Operational efficiency, asset quality, liquidity, capital adequacy, size, and profitability ratios along with governance structure are applied to identify the operational and financial performance of Islamic and traditional banks of Pakistan. The paper provides strong evidence that all variables such as CAMEL ratios, bank type and bank size except governance structure are highly significant in assessing bank performance. The findings reveal significant implications for policymakers in assessing Islamic and traditional bank performance in Pakistan, and ascertaining the direction of a future banking system in Pakistan. Findings of the study also underpin the awareness and confidence in Islamic banks of Pakistan. Furthermore, to the best of our knowledge, no comprehensive research in Pakistan has examined the performance of Islamic and traditional banks with variables under study on the current data set.
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