Business Review


This paper analyzes the performance of Islamic banks compared to that of conventional banks in Pakistan. This comparison is based on the financial performance, product services and customer perception. We have selected two Islamic banks, namely Meezan Bank limited & Albaraka Bank, and two conventional Banks, Soneri and My Bank. This selection was made because of the similar size of these banks in terms of their deposits. The paper shows that Islamic Banking is falling behind the conventional one both in terms of its business as well as customer perspective. The research is divided into three parts. First part covers the comparison of financial analysis between Islamic and conventional banks in Pakistan over last five years. For financial analysis, sixteen ratios are selected and are grouped in five major groups namely: profitability; liquidity; business development; efficiency and solvency ratios. The hypothesis is generated to rank the financial health of each bank. The second part compares the products services of Islamic and Conventional banks. This product service comparison is done on the basis of deposits, financing and services. For this deposits and certificates accounts are compared in terms of return or profit they are offering to their customers. Financing part measures the differences of car and home financing between Islamic and conventional banks. Last section of this part measures the difference of services that are provided by the respective banks to their customers. The final part of this research identifies the customer perception about Islamic and conventional banks. For this, a survey analysis is conducted from different customers of both Islamic and conventional banks. In this survey analysis, the rationale is to identify which banking system is preferred by customers. It is concluded that customers prefer Islamic banks rather than conventional banks.


Islamic banking, Financial ratios, Bank services, Conventional banking, Comparison



Journal of Economic Literature Subject Codes


Creative Commons License

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Published Online

March 05, 2021



Publication Stage



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