Parameters of conventional and Islamic Bank’s profitability in Pakistan: Evaluation of Internal Factor

Abstract

Financial sector is the perquisite for economic progress. In Pakistan from the past few years banking sector faces many challenges, it is mandatory to recognize the determinants effect the performance of banks. This study aims to analyze the key determinants of profitability of conventional and Islamic banks and to investigate the relationship between banks’ internal characteristics and performance in Pakistan. This study evaluates the effect of banks parameters and microeconomic meter on the conventional and Islamic banks profitability in the Pakistan for the period of 2006-2010. The results found that variables used in the model have sturdy effect on the profitability and higher total assets may and may not be positively related to higher profit. As the asset of the bank and network increases there may be inefficiency in the management of the banking sector.

Key words:  Parameters, Determinants of profitability Financial Institutions, Banks, Profitability.