The Determinants of the Pakistan Islamic Banking Industry Profitability

The Determinants of the Pakistan Islamic Banking Industry Profitability
Author: Farrukh Ijaz
Publisher:
Total Pages: 16
Release: 2015
Genre:
ISBN:
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The financial sector plays an important role in the economic and fiscal development of a country. A well-built and vigorous banking system is a precondition for the sustainable financial growth of a country. Over the past few years, Islamic banking industry of Pakistan has been facing many problems and challenges to maintain the financial stability. To overcome this issue, it is vital to classify the factors that mostly impact the overall profitability of Islamic banks in Pakistan. Two models were used alternatively for ROA and ROE as dependent variable. A set of internal factors were considered as independent variables including: bank's size, gearing ratio, operational efficiency, asset management and capital adequacy ratio for the time period 2006-2013. The results indicate that different measures of profitability depend upon different bank specific factors. The study found that profitability of Islamic banks depends on the leverage ratio, operating efficiency, asset management and bank size. Further research can be extended to explore the above findings and to include some other internal factors such as general bank charges, doubtful loans or reserves ratios, and external factor such as GDP, exchange rate and CPI as well.

The Banking Sector in Pakistan. Internal Determinants of Commercial Banks' Profitability

The Banking Sector in Pakistan. Internal Determinants of Commercial Banks' Profitability
Author: Saira Anis
Publisher: GRIN Verlag
Total Pages: 51
Release: 2017-09-26
Genre: Business & Economics
ISBN: 3668535906
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Academic Paper from the year 2014 in the subject Economics - Finance, grade: 2.92, , language: English, abstract: This study focuses on internal factors and how they are affecting the profitability of banks in Pakistan. The report seeks answer to the following research problems: Which internal determinants are affecting the commercial banks’ profitability in Pakistan? And: How are these internal determinants affecting the commercial banks' profitability in Pakistan? To analyze the internal determinants affecting the profitability of 14 commercial banks of Pakistan, the study is based on available data over the period of 2007 to 2012 and aims to recognize major determinants of profitability.

Determinants of Profitability of Islamic Banking Industry

Determinants of Profitability of Islamic Banking Industry
Author: Muhammad Mahmood Shah Khan
Publisher:
Total Pages: 20
Release: 2016
Genre:
ISBN:
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The financial sector plays a vital role in the expansion and growth of an economy. The essential factor for the financial growth of a country is a stable banking system. Over the past few years, Islamic banking industry of Pakistan has grown substantially, however, it faces many challenges regarding its financial stability. This study tries to assess factors that affect the profitability of Islamic banking industry over the period of 2007 to 2014. Return on assets (ROA), return on equity (ROE), and earnings per share (EPS) are used as dependent variables. Bank's size, gearing ratio, non-performing loans (NPL) ratio, operational efficiency, asset composition, asset management, capital adequacy ratio, deposit ratio, gross domestic product (GDP), and consumer price index (CPI) are used as independent variables. Findings of the study indicate that measures of Islamic banking profitability are significantly affected by bank-specific factors such as gearing ratio, asset management, deposit ratio, and NPL ratio and external factor such as CPI.

Determinants of Islamic Banking Industry's Profitability In Pakistan for the Period 2004-2012

Determinants of Islamic Banking Industry's Profitability In Pakistan for the Period 2004-2012
Author: Muhammad Abubakar Siddique
Publisher:
Total Pages: 21
Release: 2016
Genre:
ISBN:
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To explore how Islamic banking could be promoted in Pakistan, one of the crucial factors is exploring the factors that determine the profitability of Islamic Banking Industry (IBI). The studies on the determinants of Islamic banking growth focus on a number of such internal and external determinants. Because of not taking into account both internal and external factors simultaneously, most of the studies are subject to some biases. This study takes into account both internal and external determinants, empirically investigates the core determinants of growth of Islamic banking in Pakistan and evaluates the relative importance of internal and external factors in IBI's growth during the period 2004-2012. Quarterly unbalanced panel data have been used for nine Islamic banks: Five full-fledged Islamic banks and four standalone Islamic branches of conventional banks. Encompassing Approach and General to Specific (GTS) methodology have been used to select the most appropriate model. The study found that internal factors were relatively more important than external factors, because according to GTS approach, comparatively some external variables were found highly insignificant and were dropped. Internal factors like total assets, operating expenses over total assets, number of branches, capital ratio (total equity to total asset) and liquidity, and external factors like inflation and interest rate were significantly related to return on asset in both long run and short run while only inflation did not show any significant immediate impact on ROA in the short run. These findings propose that banks with high capital ratio are relatively more profitable. Efficient management of bank operations can enhance bank profitability. Islamic banks will have to improve their capability to predict inflation to adjust profit rates accordingly.

Determinants of Islamic Banking Growth in Pakistan

Determinants of Islamic Banking Growth in Pakistan
Author: Salman Ahmed Ahmed Shaikh
Publisher:
Total Pages: 16
Release: 2014
Genre:
ISBN:
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This study analyzes the banks' internal factors to study the determinants of profitability and assets growth. The study also investigates empirically the reasons why Advance to Deposits Ratio (ADR) is low in Islamic banking. Both descriptive and inferential techniques have been used. This is the first inferential study analyzing determinants of profitability in Islamic banks using panel data for the period 2007-12. The results are consistent with theory and other studies conducted in other countries. We find that net markup income is positively associated with expense and assets and negatively with NPLs (Non Performing Loans). Finance to deposits ratio is positively associated with NPL to net income, net markup income and expense to net markup income. Our results suggest that assets growth is positively related with profitability ratios and is also positively influenced by deposits growth.

The Role of Islamic Banking Industry in the Economic Growth of Pakistan

The Role of Islamic Banking Industry in the Economic Growth of Pakistan
Author: Sanaullah Ansari
Publisher:
Total Pages: 14
Release: 2020
Genre:
ISBN:
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Islamic banking industry is flourishing in Pakistan with a rapid pace. Currently, it is holding more than 8% share of the total banking industry in the country. As Pakistan is a developing economy, every sector has to contribute into its economic growth. Banking industry is also playing its role in the economic growth of Pakistan which includes conventional banks and Islamic banks. At present, there are 5 full-fledged Islamic banks along with other conventional banks offering Islamic banking services, are operating in Pakistan.This study is to examine the role of Islamic banking industry in the economic growth of Pakistan. For this purpose, the financial data of all 5 Islamic banks has been obtained from their financial statements from 3rd quarter of 2006 to 4th quarter of 2011 and the data of real GDP of the country has been taken from the source of State Bank of Pakistan. Different statistical tools were used to check the impact and role of Islamic banking industry on the economic growth of the country. It has been found that the financial performance of Islamic banking industry has a very positive impact on the economic growth because Islamic banking is attracting majority of the banking consumers on the basis of religion. Whereas, profitability of Islamic banking industry has very low impact as because Islamic banks are new in the country and they are struggling to earn profits for their consumers as per the teachings of Sharia'h. Similarly, asset quality of Islamic banking industry has no impact on the economic growth of the country. The reason is that the asset quality of Islamic banks is equivalent to the asset quality of conventional banks and it has no independent impact on the economic growth of Pakistan. Overall results show that with minor changes in the financial structure of Islamic banking industry and by increasing this industry's financial efficiency, it can play a major role in the economic development of Pakistan.

Factors Affecting Performance of Banks: a Comparative Study of Islamic and Conventional Banks in Pakistan

Factors Affecting Performance of Banks: a Comparative Study of Islamic and Conventional Banks in Pakistan
Author: Muhammad Ejaz Sandhu
Publisher:
Total Pages: 170
Release: 2019-02-17
Genre:
ISBN: 9781797400693
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Banking sector is an important part of a country's economy. They play very vital role for development of a developing country like Pakistan. In Pakistan, Islamic Banking was started properly in 2002 with Meezan Bank Ltd. and after that it was developed gradually. Up to 2012, there were 7 full fledge Islamic Banks working in Pakistan, and at present there are only 5 full fledge Islamic Banks are left. Now all conventional Banks are also trying to shift toward Islamic Banking day by day, but still there is no fast growth of Islamic Banking in Pakistan. Conventional Banks have got a good growth in the country during last 2 decades, because they earned a good profits from banking business. On the other hand, Islamic Banks in Pakistan are not earning a good profit. Most of the Banks are suffering from Losses from last few years. Only Meezan Bank is one Islamic Bank in the country, which is earning good profits regularly. Whereas other Pure Islamic Banks are facing continuous losses. It can be seen from the financial statements of all Islamic Banks for last many years.

Capital Structure Decisions in Islamic Banking

Capital Structure Decisions in Islamic Banking
Author: Dr. Syed Muhammad Abdul Rehman Shah
Publisher:
Total Pages: 16
Release: 2020
Genre:
ISBN:
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This study aims to explore the determinants of capital structure in the Islamic banking industry of Pakistan. It also aims at exploring the effects of macroeconomic conditions and policy variables on the financing decisions of Islamic banking industry. To do this, the study uses an unbalanced panel data covering the period from 2006 to 2012. The results from fixed effect model indicate that bank-specific variables, namely bank size, tangibility, and growth are positively related to banks' capital structure, whereas profitability, liquidity, and capital adequacy ratio are negatively related to the capital structural decisions of banks. On the other hand, real interest rate and inflation are negatively related to the capital structure of Islamic banking industry, while industrial production index has a positive impact upon the capital structure decisions of the Islamic banking industry of Pakistan.

Influential Factors on Profitability of Islamic Banks

Influential Factors on Profitability of Islamic Banks
Author: Ahmed Nourrein Ahmed Mennawi
Publisher:
Total Pages: 13
Release: 2020
Genre:
ISBN:
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Profitability of Islamic banks has a significant effect on banks current and future decisions that do not only associate with shareholders and management, but also for various types of stakeholders. Despite that, scholars are not yet agreement on common determinants of profitability in banking industry. This study aims to investigate the effect of bank-specific and industry characteristics along with macroeconomic variable (the inflation) on the profitability of a sample of 10 Islamic banks in Sudan. The study applied descriptive statistics, Persons' correlation and multiple regression analysis on secondary data in order to determine the relationships and degree of significant of the independent variables to profitability. The profitability has been measured by two models; as return on assets (ROA) and net profit margin (NPM). The results reveal that bank capitalization (EQTA), operational cost efficiency (OCOI), investment in short-term securities (SECA) and inflation (INF) variables are significantly affecting the profitability of Islamic banks in Sudan. In contrary, the deposit-size of the bank (as market share) is not a significant determinant of banks' profitability. Furthermore, the results indicate that quality of credit loan (NPL) is highly significant to NPM, while it is insignificant to ROA.

The Determinants Efficiency and Profitability of Islamic Banks

The Determinants Efficiency and Profitability of Islamic Banks
Author: Mohamad Akbar Noor Mohamad Noor
Publisher: LAP Lambert Academic Publishing
Total Pages: 84
Release: 2012-02
Genre: Banks and banking
ISBN: 9783846586396
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The book studies the efficiency of the Islamic banking sectors in 25 countries during the period of 1992-2009 consists of 78 Islamic banks involved. The efficiency estimates of individual banks are evaluated using the non-parametric Data Envelopment Analysis (DEA) method. The empirical findings seem to suggest that the World Islamic banks have exhibited high pure technical efficiency. A multivariate analysis based on the Tobit model reinforces these findings and significantly associated with operating expenses against asset, size, equity, NPL, Asia Financial Crisis and national income level (GDP). We also find positive correlation between bank profitability and technical efficiency levels, indicating that the more efficient banks tend to be more profitable with strong result at Asian Islamic banks. The profitability analysis by Fixed Effect Model (FEM) proposed that profit efficiency is positively and significantly associated with operating expenses against asset, equity, high income countries and non performing loans against total loans specifically for model 8 & 9 that positively at 1% level.