Abstract:
Purpose: The main focus regarding this Research is to get the accurate results regarding
performance of conventional banking channel as compare to Islamic banking channel. In
Pakistan, Islamic banks covered a great market share that’s why this topic is chosen to
identify the differences between both banks.
Methodology & Design: In this study, we considered six different banks in which three
Conventional banks are compared with 3 most famous Islamic banks. Three Conventional
banks are Bank AL-Habib, Faysal Bank and Soneri Bank Limited Whereas Islamic Banks are
Meezan Bank, Bank Islami and Al-Baraka Bank. In Pakistan there are four Islamic Banks
working in which we select three of them and Conventional Banks are selected as
considering the size ofselected Islamic banks. We consider here 12 years of data from 2007
to 2018 and performance will be measured on the basis of four different variables. The
variables are Net Income, Earning per Share, Return on Equity and Return on Asset. Four
null hypothesis are developed in this study which are based on four defined variables. In this
thesis/study, initially the Descriptive Analysis performed in which Standard Deviation and
Mean consider as important factor for the profitability evaluation. Secondly, we performed
the hypothesis testing in which we declared the results on the basis ofp-value.
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Findings: In Descriptive Analysis, we get the results regarding performance and Profitability
of banking sector which shows that Conventional banks are performing much greater as
compare to Islamic banking sector. In Descriptive analysis the differences are measured on
the basis of Mean and standard Deviation. It is highlighted that conventional banks are
proved to be higher profitable than Islamic banks which are based on Net Income, EPS, ROA
and ROE. In Hypothesis testing we develop four Hypothesis and perform t-test for the
rejection and acceptance of hypothesis. When we performed t-test on four different variables
and we get the results that p-value of all variables fall below from 0.05 that’s why we reject
all four null hypothesis. It indicates that the significance difference highlighted or found
among the performance regarding conventional banks and Islamic banks.
