Analyzing performance determinants: Conventional versus Islamic Banks in Pakistan
By A. Rashid, S. Jabeen. 2016
155 citations recorded by the source corpus.
The aim of this study is to empirically examine the bank-specific, financial, and macroeconomic determinants of performance of Islamic and conventional banks in Pakistan. To do this, we first constructed the financial performance index (FPI) based on CAMELS' ratios and then run the computed index on the said determinants. We have used an unbalanced annual panel data covering the period 2006–2012. The GLS regression results show that operating efficiency, reserves, and overheads are significant determinants of conventional banks' performance, whereas, operating efficiency, deposits, and market concentration are significant in explaining performance of Islamic banks. We also show that the impact of GDP and the lending interest rate on performance is negative for both types of banks. Bank managers may focus on controlling overheads and operating costs to improve performance because, according the empirical results presented in the study, both of these variables are negatively related to the FPI. Our results suggest that advancements in overall management practices and new standards in operating efficiency and financial risk management are essential to enhance performance of banks.
View Paper: https://www.semanticscholar.org/paper/e87527eb13116c77449b4cee6ad20bf2ba0116f2
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
- Eissa A. Al‐Homaidi
- Mosab I. Tabash
- Najib H. S. Farhan
- Faozi A. Almaqtari
- Naama Trad
- M. Trabelsi
- Jean-François Goux
Citations in the corpus
- Bank-specific and macro-economic determinants of profitability of Indian commercial banks: A panel data approach (2018, methodology): “This outcome is consistent with Rashid and Jabeen (2016) who have reported that lending interest rate affects negatively the performance of banks.”
- Economic growth and financial performance of Islamic banks: a CAMELS approach (2020, unknown): “…the banking financial performance, most of them have found that the CAMELS is pretty useful in terms of arbitrating the financial performance, Rashid and Jabeen (2016) examined the determinants of both Islamic and commercial banks in Pakistan; they have created the financial performance…”
- Risk and profitability of islamic banks: a religious deception or an alternative solution? (2015, methodology): “Likewise, using a GLS regression and the CAMELS model, Rashid and Jabeen (2016) studied the performance of a group of IBs and CBs during the 2006–2012 period.”