Gauging Profitability and Liquidity of Islamic Banks: Evidence from Malaysia and Pakistan

Muhammad Asif Khan, Majid Ali, Muhammad Atif Khan


This study aims at evaluating and comparatively analysing the financial performance of all full-fledged Islamic banks operating in Pakistan and five Islamic banks from Malaysia conveniently chosen, subject to profitability and liquidity. Data has been compiled from annual reports for 2006-11. Famous ratios analysis model has been applied with descriptive and inferential statistics to analyse the results. Empirical results revealed that Malaysian Islamic banks are more profitable, liquid and well ahead to Pakistani Islamic banks in profit margin, profit to expense, earnings per share, cash ratio and loan to deposit ratio. However no significant difference is observed in return on asset, return on equity, current ratio, cash & portfolio investment to deposit and loan to asset ratio, although Malaysian Islamic banks are superior in maintaining healthy investment portfolio and high cash ratio while Pakistani Islamic banks have maintained high loan to deposits.

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Copyright (c) 2015 Muhammad Asif Khan, Majid Ali, Muhammad Atif Khan

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International Journal of Accounting and Financial Reporting  ISSN 2162-3082

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