Abstract
The growing trend of Islamic banking in Pakistan is evident from the fact that many conventional banks have introduced the window of Islamic banking along with their conventional banking operations. This paper aims to explore the impact of internal characteristics of Islamic banks on profitability. Financial data extracted from annual reports of Islamic banks listed on KSE during 2004-2014. Pooled ordinary least squares method used to estimate the relationship between profitability and internal characteristics of Islamic banks such as non-interest earning assets, liquidity, capital ratio, size and administrative costs. Regression results indicate that non-interest earnings assets are significant and positively related to return on assets. Bank size is positively while administrative costs are negatively related to all measures of profitability. Capital ratio is positively related to return on equity and earnings per share. We expect that finding of this study provide some support to regulatory authorities, bank managers, depositors and investors to understand how internal characteristics of Islamic banks affect the profitability.
Keyword(s)
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