Abstract
Financial sector of a country plays pivotal role in the economic advancement. Therefore, the aim of this study is to analyze the performance determinants of 5 Islamic banks in Pakistan which remain active from year 2006 to 2018. By applying the Random Effect Model (REM), this study concluded that leverage and size of Islamic banks contributed significantly towards their performance. However, Islamic banks’ performance remained unaffected with respect to change in political stability level and liquidity. Therefore, this study has implication for Islamic banks managers that instead of considering political environment of Pakistan, focus should be made on bank specific matters.
Highlights
Background and Motivation of Study As the global economy is growing with rapid pace along with the economic expansion of Islamic countries, the Islamic banking is emerging as a major player in the global economy (Butt el al. 2011)
The results related to political stability and firm specific determinants of Islamic banks performance in Pakistan are reported
Islamic banking is an alternative financial system based on Islamic or Shariah laws
Summary
Background and Motivation of StudyAs the global economy is growing with rapid pace along with the economic expansion of Islamic countries, the Islamic banking is emerging as a major player in the global economy (Butt el al. 2011). To keep continue the current pace, it is imperative for Islamic banks managers to be familiar with the factors which create impact on the Islamic banks’ performance. This current study aims at analyzing the impact of political stability and firmspecific variables (leverage, liquidity and size) on the Islamic banks’ performance in Pakistan. As it was stated by Mark and Nwaiwu (2015) that political actions in a country can negatively influence the profitability of businesses and may act as a barrier towards foreign investment. In context of Islamic banks in Pakistan, the impact of political stability on their performance is not investigated before
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
