Financial performance is a general measure of firm’s overall financial health over a given period of time. The aim of
this study is to compare financial performance of Islamic and Conventional banks to support depositors, bank
managers, shareholders, investors, and regulators by providing true picture of financial position of Islamic as well
conventional banks in Pakistan Ratio analysis technique is used to analyze financial performance of both banks.
Data is collected from annual financial statements i.e. Balance sheet and Income statement for the period of 2008-
2012. Nineteen ratios were estimated to measure these performances in terms of profitability, liquidity, risk and
solvency, capital adequacy, operational, deployment and cash flow. Independent sample t test was used to determine
significance of mean differences of these ratios between two banks. The study concludes that Conventional banks
are more profitable, deployed and operationally efficient while less liquid and more risky as compared to Islamic
Banks and also found a significant mean difference in profitability, capital adequacy, and cash flow ratio of both
banks. To increase performance banks should conduct internal evaluation to improve its activities and to overcome
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