COMPARATIVE ANALYSIS OF PERFORMANCE OF ISLAMIC AND CONVENTIONAL BANKS OF PAKISTAN

Abstract

Purpose: The research is aimed at providing with a deep insight to compare the performances of both types of Banking Systems, so that the gathered information may be used by the students and investors who don’t have any insight about the banking systems. Methodology: Data integrated with this research is Secondary Data. In the context of this topic, literature review proved to be of great help. The required data for the calculation ofratios is available on the website of State Bank ofPakistan and National Bureau of Statistics. Depending upon this report, sample of five banks has been chosen for the analysis of performance of conventional banks in comparison to Islamic banks which are already five in number. The selection ofthe banks is categorized on the basis of total assets possessed by the conventional banks in comparison to those ofIslamic Banks. The chosen banks are ofequal size, but differ in performances. Findings: At 5% significant level, we concluded that there is no significant difference between Capital Adequacy Ratio ofConventional and Islamic banks The profit after tax ofIslamic banks is higher than those ofConventional Banks. ROA of conventional banks is higher than Islamic banks. Islamic banks have greater return on equity. Deposits ofIslamic Banks are not greater than Conventional banks. The investments ofIslamic banks are not higher than that of conventional Banks