Abstract:
Purpose: The study has examined the determinants of profitability in the Islamic banks of
Pakistan during the period from 2013 to 2017.
Methodology: For the sample population, the study has selected full-fledge Islamic banks of
Pakistan including Meezan Bank Limited (MBL), Dubai Islamic Bank (DIB), Bank Al Islami, and Al-Baraka bank during the period from 2013 to 2017 consecutively and
format.
in annual
Findings: The study found that the leverage was not affecting the profitability of the banks.
The banks that try to increase their market share are more likely to be investing rather than
focusing on their income, therefore, it results in their profitability decreasing rather than
increasing Moreover, the LLP (loan loss provision) to asset ratio was negatively but
significantly affecting the profitability. Furthermore, the solvency ratio and cost-to-income
ratio were positively but insignificantly affecting the profitability. Limitations: One was the study was conducted only in reference to the banking sector which means
that the outcome of this research is limited to the banking sector only and cannot be
used for any other sector or industry, thus, restricting the overall scope of the study to banks
only.
Implications: The result of leverage and profitability is positive and insignificant. So, it is
recommended that managers should develop some accurate strategies that can gain specific
amount of profits or returns. Also, try to maneuver in the abilities so that the competitive
position could change in a market in the presence of fluctuations in the market share.
