THE DETERMINANTS OF FINANCIAL PERFORMACE OF ISLAMIC BANKS IN PAKISTAN

Abstract

In this study I attempt at investigating the impact of how the bank-specific factors affect the performance of Islamic banks. This study uses sample that is composed of Islamic banks of Pakistan from period 2009 to 2013. It is evident from both statistical linear regression models that the relationship of gearing ratio, bank size and operating efficiency ratio found to have a positive relation and are statistically insignificant, whereas the asset management is statistically significant at the 5% significance level in equation I and II with positive relation. Moreover capital ratio found to have negative insignificant relation in equation 1 but it is significant at 10% level of significance in equation 2.However, NPLs ratio is negatively significant at 10% level of significance in both equations. This research offers researchers and practitioners both with insights to enhance the financial and economic literature as regards the financial performance of Islamic banks.