Effect of current economic conditions on the profitability of Islamic and conventional banking

Abstract

Banking is one of the most sensitive businesses all over the world. Banks play very important role in the economy of a country and Pakistan is no exemption. Banks play very positive and important role in the overall economic development of the country. Pakistan has a well-developed banking system, which consists of a wide variety of institutions ranging from a central bank to commercial banks and to specialized agencies to cater for special requirements of specific sectors.

This research is aimed to assess and investigate the monetary performances of banking sector of Pakistan under current economic scenario. In Pakistan, banking sector has a lot of experience. Secondary data has been taken for analysis. The current and past financial data of the banks has been analyzed for the purpose of investigating their financial performances.

Pakistan has a democratically elected government where the ruling party is Pakistan Muslim league N. Common perception is that it is a weak government, nevertheless backed by the western powers. It is not considered to be a stable government which could change anytime.

Law & Order and the corruption situation in the country were at its most horrible. However, the press is quite free where the industry as a whole has seen not growing over the past few years.

Health and Education sectors are the two most important sectors for any country, specially a developing nation. It is the government’s responsibility to provide the best possible health care and educational facilities for its people. Industrialization in the country is fairly stagnant with international investors quite wary of entering this risky Pakistani market. Therefore, latest manufacturing technology is significantly missing from the market. As a result, the countries imports are higher than its exports. And the main exports are from the agricultural sector and the textile industry. To sum up, it is paramount to revisit the fact that banking sector in Pakistan is very resilient and has future prospects that have and are playing a vital role when it comes to revenue generation. Not only do the banks lend money to the GoP, they also invest their assets in such securities and avenues that yield the best results.