Empirical Investigation of Risk Management Framework for Pakistani Islamic Banks

Empirical Investigation of Risk Management
Framework for Pakistani Islamic Banks

Table of Contents
STUDY AIM...................................................................................................................................1
STUDY OBJECTIVES....................................................................................................................1
INTRODUCTION...........................................................................................................................1
LITERATURE REVIEW................................................................................................................2
DATA AND METHODOLOGY.....................................................................................................2
GANTT CHART.............................................................................................................................3
REFERENCES................................................................................................................................6

STUDY AIM
 The aim of the study is to empirically investigate risk management framework of
Islamic banks in Pakistan.
STUDY OBJECTIVES
 To briefly discuss the risks faced by Islamic banks and describe the
difference between the risk faced by Islamic and conventional banks
 To empirically analyses and investigate the relationship between financial
performance and risk management of Islamic banks.
 To identify the main techniques and practices of risk management in
Islamic bank of Pakistan.
 To investigate the efficiency of risk management structure of Islamic
banks Pakistan.
 To discuss the challenges faced by Islamic banks m Pakistan regarding
risk management
INTRODUCTION
The modern Islamic banking system is not as conventional banking system. In the 1970s,
Egypt, the first ever current Islamic banking system was introduced. After the tremendous
success of the Islamic Banking system since its introduction to the world, the only purpose of the
bank was to implement sharia principles (Alam and Rizvi, 2017). The projected assets of the
Islamic banks will be worth $3.5 trillion by 2020 with the estimated growth of between 10-
12% over the last 10 years and more than 622 Islamic financial institutions has been
established worldwide (“Impact of Islamic Banking,” 2018). There has been a significant
growth of 35% in 2017 of Islamic banking industry in Pakistan. As per The State Bank of
Pakistan, there was an increase in profit before tax by Islamic banking sector amounting to
Rs.23 billion in 2017. By the end of 2017, there were about 21 Islamic banking institutions
out of which 5 were fully based on Islamic banking system and 16 were conventional banks
with Islamic banking windows (Al-Tamimi, Hussein, Miniaoui and Elkelish, 2015). Islamic
banks in Pakistan needs to pay more attention towards its risk management structure in
order to keep its growth consistent every year or to increase its assets value in the coming
years.
Risk management plays a crucial role in the survival, growth and progress of Islamic
banking sector. But this study will focus on the different risks that are faced by the Islamic
banks and to identify the different methods of risk management to empirically analyse and
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