Abstract
This study examines the strength of linkage between current risk management practices and the profitability of five Islamic Banks in Pakistan. In order to achieve this objective, the current risk management practices of five Islamic banks were studied and quantified over a period of seven years. The study uses both primary (survey questionnaires) and secondary data (annual reports) to gather information. The link of these practices with the banks’ financial performance, controlling for other internal and external determinants of profitability was analyzed by adopting an econometric framework. Estimating pooled regression and checking the reliability of the estimated model through Augmented Dickey-Fuller test, it was found that the risk management framework had a statistically significant negative impact on profitability during the period under review.
Published Version
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