A Crital Review of Islamic and Conventional Banking in Digital Era: A Case of Pakistan

  • Authors

    • Dr. Muzaffar Asad
    • Israr Ahmad
    • Syed Hussain Haider
    • Dr. Rabia Salman
    2018-09-27
    https://doi.org/10.14419/ijet.v7i4.7.20382
  • Islamic banking, conventional banking, digital economy, comparison, risk management.

  • Abstract

    Islamic banking is growing at a fast pace in economies which are considered as the champions of entrepreneurship and counter interest-based monetary system. Currently, Islamic banks have touched $1 trillion and is rising around at 20% yearly. However, this rapid growth is not limited to the Muslim countries but commodities of Islamic institutions are obtaining reputation in non-Muslim countries. The purpose of this study is to understand the main differences in Islamic and conventional banking in Pakistan on the basis of cost and benefit analysis, comparison of lending structure, and comparison of risk management especially in the context of current digital era. The methodology followed in the paper is based on the review of literature and particularly the banking practices in Pakistan. In this study, it has been analyzed that how a system made by Muslim economists long ago has become a powerful reality. This study inspects the upright addendum of Islamic banking and compare it to conventional banking. Effects of the inspection are positive as the productivity and success of Islamic banks is better than that of non-Islamic banks even in current digital economies. It is useful for the practitioners and policy makers to seek guidance for strengthening of the system.

     

  • References

    1. [1] Abdul-Majid, M., Saal, D. S., & Battisti, G. (2010). Efficiency in islamic and conventional banking: an international comparison. Journal of Productivity Analysis, 34(1), 25-43.

      [2] Ahmad, A., Malik, M. I., & Humayoun, A. A. (2010). Banking developments in Pakistan: A journey from conventional to islamic banking. European Journal of Social Sciences, 17(1), 12-17.

      [3] Ake, C. (1975). A definition of polictical stablity. Comparative Politics, 4(3), 133-156.

      [4] Akhtar, M. F., Ali, K., & Sadaqat, S. (2011). Liquidity risk management. Interdisciplinary Journal of Research in Business, 5(2), 78-102.

      [5] Akhter, S. (2008). Islamic Banking. Karachi: Institute of Bankers.

      [6] Ali, M. A. (2014). Evolution & development of islamic banking – The case of Pakistan. European Journal of Islamic Finance, 1, 1-6. doi:http://dx.doi.org/10.13135/2421-2172/777

      [7] Aliyu, S., & Yusof, R. M. (2016). profitability and cost efficiency of islamic banks: A panned analysis of some selected countries. International Journal of Economics and Financial Issues, 6(4), 1736-1743.

      [8] Ansari, S., & Rehman, A. (2013). Financial performance of islamic and conventional banks in Pakistan. 8th International Conference on Islamic Economics and Finance, 6(3), 445-486.

      [9] Ariss, R. T. (2010). Competitive conditions in Islamic and conventional banking: A global perspective. Review of Financial Economics, 19(3), 101-108. doi:10.1016/j.rfe.2010.03.002

      [10] Azmi, F. B. (2013). An empirical analysis of the relationship between GDP and unemployment, interest rate and government spending. Interest Rate and Government Spending, 89-112. doi:http://dx.doi.org/10.2139/ssrn.2276817

      [11] Beck, T., Demirgüç-Kunt, A., & Merrouche, O. (2013). Islamic vs. conventional banking: Business model, efficiency and stability. Journal of Banking & Finance, 37(2), 433-447. doi:10.1016/j.jbankfin.2012.09.016

      [12] Dietsch, M., & Lozano-Vivas, A. (2000). How the environment determines banking efficiency: A comparison between French and Spanish industries. Journal of Banking & Finance(24), 985-1004. doi:10.1016/S0378-4266(99)00115-6

      [13] Faisal, M., Shabbir, M. S., Javed, S., & Shabbir, M. F. (2016). Measuring Service Quality and customer satisfaction in Pakistan: Evidence Based on Carter Model. International Business Management.

      [14] Gafoor, A. A. (1995). Interest Free Commercial Banking (Vol. chapter#5).

      [15] Hong, H., & Yogo, M. (2012). What does futures market interest tell us about the macroeconomy and asset prices? Journal of Financial Economics, 105(3), 473–490. doi:10.1016/j.jfineco.2012.04.005

      [16] Hussain, H. A., & Alâ€Ajmi, J. (2012). Risk management practices of conventional and Islamic banks in Bahrain. The Journal of Risk Finance, 13(3), 215-239. doi:10.1108/15265941211229244

      [17] Iqbal, M. J., Ali, G., Shabbir, M. S., Director, M., & Saleem, M. (2410). the Effect of Devotee-Based Brand Equity on Religious Events. Paradigms: A Research Journal of Commerce, 10(1), 23–43.

      [18] Islam, J. U., & Rahman, Z. (2017). Awareness and willingness towards Islamic banking among Muslims: An Indian perspective. International Journal of Islamic and Middle Eastern Finance and Management, 10(1), 92-101. doi: https://doi.org/10.1108/IMEFM-01-2016-0017

      [19] Jalbani, A. A., & Shaikh, S. A. (2009). Risk management in islamic and conventional banks: A differential analysis. Journal of Independent Studies and Research, 7(2), 67-70.

      [20] Lal, P., & Snehal, S. (2008). Islamic Banking and its Application in the Current Economy. Review on Islamic Banking, 134-149.

      [21] Lee, K.-h., & Ullah, S. (2008). Inter-bank cooperation between islamic and conventional-The case of Pakistan. International Review of Business Research Papers, 4, 1-26.

      [22] Mahmood, M. N. (2007). Economic Survey of Pakistan. Islamabad: Government of Pakistan.

      [23] Miah, M. D., & Uddin, H. (2017). Efficiency and stability: A comparative study between islamic and conventional banks in GCC countries. Future Business Journal, 3(2), 172-185. doi:10.1016/j.fbj.2017.11.001

      [24] Mobarek, A., & Kalonov, A. (2013). Comparative performance analysis between conventional and islamic banks. Applied Economics, 5(1), 125-162.

      [25] Nazir, M. S., Daniel, A., & Nawaz, M. M. (2012). Risk management practices: A comparison of conventional and islamic banks in Pakistan. American Journal of Scientific Research, 2(2), 433-452.

      [26] Shatilova L.M., Borisova V.V., Kasatkina O.A. (2018). Representation of the linguistic and cultural concept “lie†in the French and Russian language picture of the world, 34(85), Pp. 194-212.

      [27] 2 Bakhyt S., Kalimbetov B., Khabibullayev Z. (2018). Possibilities of Mathematical Problems in Logical Thinking, Development of Secondary Education Pupils, 34(85), P.p. 321-338.Sabir, R. I., Akhtar, N., Ghafoor, O., & Hafeez, I. (2014). Difference between islamic banks and commercial banks performence in Pakistan. International Review of Management and Business Research, 3(4), 48-59.

      [28] Samad, A. (2004). Performance of interest-free Islamic banks vis-Ã -vis Interest-based conventional banks of Bahrain. International Journal of Economics, Management and Accounting, 12(2).

      [29] Shabbir, M. S. (2009). SUPPORTIVE LEARNING ENVIRONMENT - A BASIC INGREDIENT OF LEARNING ORGANIZATION. In Proceedings 2nd CBRC, Lahore, Pakistan November 14, 2009.

      [30] u Van TUAN Communicative Competence of the Fourth Year College Students: Basis for proposed English Language Program, Astra Salvensis, Supplement No. 2, 2017, p. 45

      [31] [1] Irina MALGANOVA, Andrey ERMAKOV, Development of heating Devices from Polypropylene, Astra Salvensis, Supplement No. 2, 2017, p. 93

      [32] Jana Arturovna KLAAS, Thomas Arturovich KLAAS Econometric Model of Early Diagnosis of a Credit Institution Bankruptcy Risk, Astra Salvensis, Supplement No. 2/2017, p. 107.

      [33] Gulnaz Mavletzyanovna GALEEVA, Olga Aleksandrovna AKTASHEVA Forecasting the Dynamics of Foreign Direct Investment in the Russian Economy, Astra Salvensis, Supplement No. 2/2017, p. 137

      [34] Kamil Maratovich ARSLANOV, Artur Ilfarovich KHABIROV About the Weak Party of the Loan Contract, Astra Salvensis, Supplement No. 2/2017, p. 323.

      [35] Ullah, N. (2016). Influencing factors of profitability on the banking industry : A case study of GCC countries. Munich Personal RePEc Archive, 1-21

  • Downloads

  • How to Cite

    Muzaffar Asad, D., Ahmad, I., Hussain Haider, S., & Rabia Salman, D. (2018). A Crital Review of Islamic and Conventional Banking in Digital Era: A Case of Pakistan. International Journal of Engineering & Technology, 7(4.7), 57-59. https://doi.org/10.14419/ijet.v7i4.7.20382

    Received date: 2018-09-27

    Accepted date: 2018-09-27

    Published date: 2018-09-27