Competitiveness of Islamic Financial System: An Empirical Analysis of Internal and External Factors Influence on Pakistan Islamic Bank's Profitability.

Islamic banks can be defined as a non-interest-based institution that fully acts under Islamic laws. Due to being less affected by the global financial crisis Islamic bank grabbed the attention of researchers, but in Pakistan the growth rate of Islamic banks is very low. Pakistan Islamic bank sector has not achieved even 15% of overall market share in banking industry (12.9% SBP, Islamic Bank Bulletin, 2018). The purpose of this study is to find the reasons of bankruptcy and decline in profitability of Pakistan's fully fledged Islamic banks and determine the primary drivers of Islamic bank's profitability. The study proposed an integrated model which examines the Bank specific/Internal and Environment Specific/External Factors influence on Islamic bank's Profitability. Managers and academics know fairly little about how the collective effects of these internal and external factors influence the Islamic bank's profitability. Study is quantitative in nature and primary data was collected from 508 senior managers of Pakistani Islamic banks. Conclusively, finding reveal that internal/bank specific, external factors have significant and positive impact on Islamic bank's profitability. Results of study is helpful for the practitioners and policy makers to understand reasons of profitability decline and make new polices for Islamic banks growth [ABSTRACT FROM AUTHOR]

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