Determinants of Financial Performance of Commercial Banks: A Comparison of Islamic and Conventional Banks in Pakistan

This study has two major purposes. First, find determinants of financial performance of commercial banks in Pakistan. Second, A comparison of Islamic and conventional banks in Pakistan. This study is also related determinants of financial performance of commercial banks in Kenya, which has been written by Vincent Okoth Ongore& Gemechu Berhanu Kusa (2013). In that study the some same variable were discussed as in this study. Here the whole literature has been discussed in two important ways. First, we employ Ordinary Least Square (OLS) to determine the determinants of financial performance of commercial banks in Pakistan. Secondly, A comparison of Islamic and conventional banks in Pakistan. At the end of second step, this study is regressed by coefficients measures resulting from the OLS model in contradiction of the banks result variables to regulate the way and degree of the influence of final on the Return on assets, Return on equity and Net interest income. Numerous curious outcomes are obtained. First, pragmatic results designate that bank specific variables (assets quality & Liquidity ratio) are significantly effects with bank performance indicator while capital adequacy rarely significant for all commercial banks. However, macroeconomic GDP and inflation rate are significantly affected with bank performance indicator, while interest rate and exchange are un-significantly affect. Second, the results designate that bank specific variables (assets quality & capitaladequacy) are significantly effects with bank performance indicator while Liquidity ratio rarely significant for all Islamic banks.But macroeconomic (GDP, inflation rate, interest rate, Exchange rate) are un-significantly affected with bank performance indicator.