Abstract
Islamic banking is operating on the Sharia principles of finance. Here,
the transactions are Riba free and avoid unethical practices, participate
actively to achieve goals and objectives of Islamic Economy. On the
other hand, conventional banks are operating on the man-made
principles where the predetermined rate of interest is the core activity.
This research study analyses the performance of Islamic versus
conventional banks in Pakistan over the period of 2008-2010. The aim
of this study is to examine and to evaluate the performance of the two
Islamic banks (Meezan and Dubai Islamic) and two conventional banks
(MCB and HBL) in Pakistan for the year 2008 to 2010. Pakistan has
been chosen as a focal point for the study since both types of banks are
performing in the market and there has been no such study previously in
the country. This research study investigates whether Islamic banks are
performing well in Pakistan compared to the conventional banks.
Financial ratio analysis for liquidity, profitability, solvency and activity
analysis of the mentioned banks from both categories was performed to
test the overall performance. The result indicates that conventional
banks are more profitable than Islamic banks in Pakistan for year 2008
to 2010. Islamic banks in Pakistan have better current, cash, debt to
asset and asset turnover ratio while conventional banks have good
performance in other remaining ratios. Although in some ratios
performance of Islamic banks are also good but according to overall
results conventional banks of Pakistan are more efficient than Islamic
banks for year 2008 to 2010.
Dr.Shahid Jan Kakakhel, Faryal Raheem, Dr. Muhammad Tariq. (2013) A Study of Performance Comparison between Conventional and Islamic Banking in Pakistan, Abasyn Journal of Social Sciences, Volume-06, Issue-2.
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