A Comparative Study for Determinants of Financial Performance Across Banking and Non-Banking Institutions in Pakistan

Abstract

Non-Banking Financial Institutions (NBFIs) have lower profitability as compared to banking institutions, which is one of the important reasons for sluggish growth and NBFI's contribution to economic development. Previous studies investigated the factors contributing to the financial performance of conventional and Islamic banks, but scant literature is available on the determinants of performance of non-banking financial institutions, especially in comparison to banking institutions. The present study provides detailed insight into internal determinants for the performance of Non-banking financial institutions in Pakistan. Secondary data was extracted from financial statement analysis of SBP and annual reports of selected conventional banks, Islamic bank, modaraba, and leasing companies for the period of 2007 to 2016. Size (Sz), Capital Adequacy (CA), Credit Risk (CR), Efficiency (Eff), and Liquidity Risk (LR) have been taken as independent variables, and financial performance of FIs was measured through dependent variables of Return on Assets (ROA) and Return on Equity (ROE). Ratio analysis was done, and statistical techniques of correlation, regression were applied to identify the relationship among variables. Analysis was done for all sample institutions as a whole and separately for each type as well. It brought an immense variety in the analysis and result, which shows the different impact of independent variables on the dependent variable for different types of institutions. The factors contributing towards slow and negative growth of non-banking financial institutions have not been analyzed as much as it should be done. It is the novelty of this work is to recognize problematic areas of non-banking financial institutions of the country.

The Influence of Investment Returns and Tabarru Fund Contributions on The Asset Growth of Registered Sharia Life Insurance Companies in Ojk in The Period 2019-2022

“…The growth of Islamic IKNB assets in 2017-2021 shows an increase, although in 2018 there was a slight decrease, but in the following year it was able to provide significant changes. The Islamic non-bank financial institutions in question are insurance institutions, pension funds, specialized institutions, supporting service industries and micro institutions (ALI, QURESHI, ZIA, & BILAL, 2021;Miah, Suzuki, & Uddin, 2021).…”