Abstract
One of the essential factors for the financial growth of a country is a stable banking
system. Over the past few years, Islamic banking industry of Pakistan has grown
substantially. However, it faces many challenges regarding its financial stability. The
present study attempts to examine the impact of working capital and financial
structure on Pakistan banking sector profitability. The study used generalize least
square (GLS) estimation analysis on 5 Islamic banks over the period 2006 to 2014
and 15 conventional banks from 2008 to 2014. Return on assets (ROA), return on
equity (ROE) and net income (NI) are used as dependent variables. Working capital
and proportion of funds provided by bank creditors are used as independent
variables. Bank size, deposit ratio, gross domestic product (GDP) and inflation (CPI)
are used as control variables to control heterogeneity and co-linearity among
variables. Study found an increase in working capital results decrease in the
profitability of Islamic and conventional banks. However, financial leverage has
statistically significant positive impact on profitability of Islamic banks and vice
versa for conventional banks
EjazAslam, AnamIqbal, FarrukhIjaz. (2016) Does Working Capital and Financial Structure Impact Profitability of Islamic and Conventional Banks Differently?, Islamic Banking and Finance Review, Volume 3, Issue 1.
-
Views
285 -
Downloads
31
