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How to Cite
Derivative Usage and Bank Stability: A Comparison of Islamic and Conventional Banking from Pakistan
Abstract
Objective of this study includes influence of derivative usage on performance of Islamic and conventional banking sector working in Pakistan. Various studies have testified the concept of derivative usage in Islamic banks while various authors have testified it in conventional banks. This study opted 12 commercial banks and 5 Islamic banks. Data is used from 2015 to 2019. Four types of derivatives i.e. forward, options, swaps and future are used. CAMEL method is used to evaluate the performance of banks that was used by Mohamed Rochdi Keffala (2020). The CAMEL variable are related to bank features like managerial skills, earning capital, quality of an asset, liquidity and market risk adherence. Results revealed that forwards and Swaps effects positively the bank stability in conventional banks while option and future affects negatively the bank performance in conventional bank while in Islamic mode of banking the results are different. Swaps and options increase the performance while forward and future destabilize the banks.
Authors
Usman Shaukat
Ph. D Scholar, Faculty of Management Sciences, International Islmic University, Islamabad, Pakistan
Dr. Salman Ali Qureshi
Assistant Professor, Department of Business Administration, Allama Iqbal Open University Islamabad, Pakistan
Dr. Ayaz ul Haq
Management Sciences Department, Islamabad Business School, Islamabad, Pakistan
