Abstract

This study analyzes the performance of conventional versus Islamic banks in Pakistan. For the purpose, we have first constructed the Financial Performance Index (FPI) based on CAMELS’ ratios and then ranked the banks on the basis of the constructed FPI. We have used annual data covering the period 2006-2012. The results reveal that conventional banks were on top of the list and Islamic banks stood mostly after 12th rank in terms of performance over the period. Yet, the progress ratio depicts that Islamic banks had better performance in 2012 as compared to 2006.

Keywords

Islamic Banks; Conventional Banks; Pakistan; Financial Performance Index; CAMELS Ratios; Ranking.