Macroeconomic and Bank Specific Determinant of Islamic Bank Profitability

Empirical Evidence from Pakistan


  • Abdul Wahab Research Scholar - Pakistan



Macroeconomic factor, Islamic banks, Financial performance, Bank size, Internal factors


Islamic banking is one of the most important parts of the financial sector, especially in Islamic countries. It is very necessary to determine which factors that define Islamic bank profitability in the Pakistan context. This study investigates the impact of bank-specific and macroeconomic factors on Islamic bank profitability in the context of Pakistan. ROE and ROA are used as a measure of Islamic bank profitability that acts as the dependent variable. Five bank-specific variables include bank size, capital adequacy, operating efficiency ratio, cash & equivalent ratio, and deposit ratio and three macroeconomic factors include real GDP growth, inflation rate, and interest rate act as an independent variable. 10-year data 2008 to 2017 of four full fledge Islamic bank data has been from the central bank. The ordinary least model is used for regression analysis. The finding of the study indicates that bank size, inflation, and interest rate positively correlated with Islamic bank profitability. Real GDP is not significantly associated with Islamic bank profitability in the Pakistan context. 


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How to Cite

Wahab, A. (2020). Macroeconomic and Bank Specific Determinant of Islamic Bank Profitability: Empirical Evidence from Pakistan. Karachi University Business Research Journal, 1(2), 58-67.