Author

Haneeah Jawed

Student Number

05208

Degree

Master of Science in Islamic Banking & Finance

Department

Department of Finance

Faculty/ School

Faculty of Business Administration (FBA)

Date of Award

Fall 2021

Advisor

Dr. Irum Saba, Associate Professor & Program Director MS-IBF, Department of Finance, Institute of Business Administration (IBA), Karachi

Second Advisor

Dr. Muhammad Ayub, Director Research, FMS, Riphah International University, Islamabad

Third Advisor

Dr. Shabeer Khan, Assistant Professor, Sukkur IBA University/ Sakarya University

Project Type

MS IBF Thesis

Access Type

Restricted Access

Abstract

Stress testing in the financial sector quantifies the impact of any extreme economic shock which might impact the viability and going concern of financial institutions or the financial system. Stress testing exercises are conducted to identify macroeconomic factors that determine the performance of the financial sector. This research is an empirical study on the macroeconomic stress determinants of the Islamic banking industry’s financial indicators. The objective of this research is to establish macro financial linkages in the Islamic banking industry of Pakistan and understand the Islamic banking stress factors and their resulting performance implications. Econometric analysis is also carried out to examine how macroeconomic conditions affect financing, deposits and overall assets in the Islamic banking industry. A sample of all full-fledged Islamic banks and conventional banks having standalone Islamic banking branches in Pakistan have been studied for the period of 2010-2020. This research not only fills the gap of such an empirical study but also tends to promote the stability of the Islamic financial system.

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