A Comprehensive Examination of Internal Factors Impact on Islamic Banks Profitability in Pakistan: A Quantitative Analysis
Purpose: This study examines the internal factors that are influencing profitability in Pakistani Islamic banks during the period 2016-2021. Design/Methodology/Approach: The analysis utilizes panel data regression models to address potential estimation bias. Findings: The study covers key Pak...
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| Format: | Article |
| Language: | English |
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CSRC Publishing
2023-12-01
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| Series: | Journal of Accounting and Finance in Emerging Economies |
| Subjects: | |
| Online Access: | https://publishing.globalcsrc.org/ojs/index.php/jafee/article/view/2885 |
| _version_ | 1797207622032556032 |
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| author | Nasir Abbas Muhammad Ali Raza Zainab Paracha Muhammad Sadiq Shahid |
| author_facet | Nasir Abbas Muhammad Ali Raza Zainab Paracha Muhammad Sadiq Shahid |
| author_sort | Nasir Abbas |
| collection | DOAJ |
| description |
Purpose: This study examines the internal factors that are influencing profitability in Pakistani Islamic banks during the period 2016-2021.
Design/Methodology/Approach: The analysis utilizes panel data regression models to address potential estimation bias.
Findings: The study covers key Pakistani Islamic bank financial performance criteria. Internal factors significantly affect ROE and EPS. Gearing and capital ratios enhance ROE/EPS. Due to increased capitalization and leverage, Islamic banks' capital management is vital to profitability. ROE and NIM models are affected by deposits. Deposit funding drives Islamic bank profitability and interest income. In the NIM model, liquidity and NPL ratios affect ROE and EPS significantly. Asset quality and liquidity management effect interest income, not profits. Bank size does affect ROE and EPS models, which is notable in the findings. Islamic financial institutions can prioritize specialization and efficiency over expansion. These numbers indicate Pakistani Islamic banks' finances. Capitalization, leverage control, and deposit mobilization are key to financial success, while risk management ensures stability and profitability during economic downturns.
Implications/Originality/Value: The detailed investigation shows Pakistan's Islamic banking profitability. Deposit management, capital structure, and asset quality impact profitability. Capitalization and leverage improve earnings, therefore financial management matters. Deposit management is vital to profitability since it affects performance. Recession-sensitive Islamic banks show resiliency. NPA mitigation and liquidity management affect net interest margin, as a key driver. This research offers valuable insights for internal management strategies and regulatory frameworks aimed at enhancing the stability and growth of Islamic banking in the region.
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| first_indexed | 2024-04-24T09:25:50Z |
| format | Article |
| id | doaj.art-8efe9c1d351a4dd0a0f70dc0b540e080 |
| institution | Directory Open Access Journal |
| issn | 2519-0318 2518-8488 |
| language | English |
| last_indexed | 2024-04-24T09:25:50Z |
| publishDate | 2023-12-01 |
| publisher | CSRC Publishing |
| record_format | Article |
| series | Journal of Accounting and Finance in Emerging Economies |
| spelling | doaj.art-8efe9c1d351a4dd0a0f70dc0b540e0802024-04-15T14:53:38ZengCSRC PublishingJournal of Accounting and Finance in Emerging Economies2519-03182518-84882023-12-019410.26710/jafee.v9i4.2885A Comprehensive Examination of Internal Factors Impact on Islamic Banks Profitability in Pakistan: A Quantitative AnalysisNasir Abbas0Muhammad Ali Raza1Zainab Paracha2Muhammad Sadiq Shahid3College of Commerce Government College University Faisalabad, PakistanBahaddin Zakariya University Multan, Pakistan Bahaddin Zakariya University Multan, Pakistan Bahauddin Zakaria University Multan, Pakistan Purpose: This study examines the internal factors that are influencing profitability in Pakistani Islamic banks during the period 2016-2021. Design/Methodology/Approach: The analysis utilizes panel data regression models to address potential estimation bias. Findings: The study covers key Pakistani Islamic bank financial performance criteria. Internal factors significantly affect ROE and EPS. Gearing and capital ratios enhance ROE/EPS. Due to increased capitalization and leverage, Islamic banks' capital management is vital to profitability. ROE and NIM models are affected by deposits. Deposit funding drives Islamic bank profitability and interest income. In the NIM model, liquidity and NPL ratios affect ROE and EPS significantly. Asset quality and liquidity management effect interest income, not profits. Bank size does affect ROE and EPS models, which is notable in the findings. Islamic financial institutions can prioritize specialization and efficiency over expansion. These numbers indicate Pakistani Islamic banks' finances. Capitalization, leverage control, and deposit mobilization are key to financial success, while risk management ensures stability and profitability during economic downturns. Implications/Originality/Value: The detailed investigation shows Pakistan's Islamic banking profitability. Deposit management, capital structure, and asset quality impact profitability. Capitalization and leverage improve earnings, therefore financial management matters. Deposit management is vital to profitability since it affects performance. Recession-sensitive Islamic banks show resiliency. NPA mitigation and liquidity management affect net interest margin, as a key driver. This research offers valuable insights for internal management strategies and regulatory frameworks aimed at enhancing the stability and growth of Islamic banking in the region. https://publishing.globalcsrc.org/ojs/index.php/jafee/article/view/2885Islamic banking profitabilityInternal factorsPanel data regression |
| spellingShingle | Nasir Abbas Muhammad Ali Raza Zainab Paracha Muhammad Sadiq Shahid A Comprehensive Examination of Internal Factors Impact on Islamic Banks Profitability in Pakistan: A Quantitative Analysis Journal of Accounting and Finance in Emerging Economies Islamic banking profitability Internal factors Panel data regression |
| title | A Comprehensive Examination of Internal Factors Impact on Islamic Banks Profitability in Pakistan: A Quantitative Analysis |
| title_full | A Comprehensive Examination of Internal Factors Impact on Islamic Banks Profitability in Pakistan: A Quantitative Analysis |
| title_fullStr | A Comprehensive Examination of Internal Factors Impact on Islamic Banks Profitability in Pakistan: A Quantitative Analysis |
| title_full_unstemmed | A Comprehensive Examination of Internal Factors Impact on Islamic Banks Profitability in Pakistan: A Quantitative Analysis |
| title_short | A Comprehensive Examination of Internal Factors Impact on Islamic Banks Profitability in Pakistan: A Quantitative Analysis |
| title_sort | comprehensive examination of internal factors impact on islamic banks profitability in pakistan a quantitative analysis |
| topic | Islamic banking profitability Internal factors Panel data regression |
| url | https://publishing.globalcsrc.org/ojs/index.php/jafee/article/view/2885 |
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