Abstract:
Purpose:
The study has aimed to investigate the comparison between Islamic banks of Pakistan
based on their profitability using secondary data from financial
Methodology:
In order to assess
reports.
the determinants of Islamic banks’ profitability in Pakistan the study
has selected listed Islamic banks of Pakistan using their annual reports and audited
financial statements during the period between 2013 and 2017. However, to statistically
the objective of the study, panel OLS, panel cointegration analyses have been
employed using EViews 9.
assess
Findings:
The results of pooled OLS using random-effect analysis have shown that capital adequacy
ratio, and loan to asset ratio have negatively significant relationship with ROE, while cost
to total asset has negatively insignificant relationship with ROE. Bank size and
interest income have positively significant relationship with ROE while inflation and
GDP growth have no relationship with ROE.
nonimplications:
Banks managers should also work on increasing the size of bank. Investors are more
attracted towards the big banks to have their investments. Secondly the depositors also
feel it safe to have their money deposited in some big banks. Thus the bank managers
should take decisions to increase their bank size in order to generate more profit with the
help of gaining trust. Lastly the managers should also be focusing on the non interest
income.
