Composite Islamic Finance Index: A performance base measure of Islamic Financial Sector of Pakistan

Authors

  • Ambereen Kanwal M.Phil. Scholar, Department of Economics, National College of Business Administration & Economics, Sub Campus Multan, Pakistan. Author
  • Muhammad Zubair Saeed Assistant Professor, Department of Economics, National College of Business Administration & Economics, Lahore, Sub-Campus Multan, Pakistan. Author
  • Zujaj Ahmed Lecturer & Ph.D. Scholar, Department of Business Administration, National College of Business Administration & Economics, Sub Campus Multan, Pakistan. Author
  • Muhammad Uzair Saeed MBA Finance, Department of Business Administration, Bahauddin Zakariya University, Multan, Pakistan. Author
  • Kainat Fatima M.Phil. Scholar, Department of Economics, National College of Business Administration & Economics, Sub Campus Multan, Pakistan. Author
  • Muhammad Ali Hameed Lecturer, Department of Islamic Studies, National College of Business Administration & Economics, Sub Campus Multan, Pakistan. Author

DOI:

https://doi.org/10.61506/01.00088

Keywords:

Islamic Banking & Finance, Islamic Insurance, Islamic Finance Index (IFI), PCA (Principal Component Analysis)

Abstract

Islamic indices are now paramount to Islamic Finance because they specify how Islamic investors evaluate the financial markets and the spectrum of financial instruments available for investment. This research created Pakistan's first-ever Islamic Finance Index (IFI). It incorporates a total of five variables, including IBFIN (Islamic Banks Financing), IBINV (Islamic Banks Investment), IBROA (Islamic Banks Return on Assets), IBROE (Islamic Bank's Return on Equity), and TCPBT (Takaful Companies Profit Before Tax) regarding Islamic insurance. Annual data from 2005 to 2022 was incorporated. The principal component analysis (PCA) was used to create this index, and various diagnostics were applied. The results revealed that Pakistan's Islamic finance industry gradually increased from 2005 and peaked in 2020, then declined slightly during COVID-19 but is on track to rise again from the third quarter of 2021 till now. The study's final results divulged that Pakistan's Islamic financial industry was not severely affected and was strong enough to survive during COVID-19 rather than collapse. This study is precious in serving policymakers, financial analysts, and potential investors in understanding the performance of Pakistan's overall Islamic finance industry.

Author Biography

  • Muhammad Zubair Saeed, Assistant Professor, Department of Economics, National College of Business Administration & Economics, Lahore, Sub-Campus Multan, Pakistan.

    Dr. Muhammad Zubair Saeed is currently working as Head of Department and Assistant Professor at the Department of Economics, National College of Business Administration & Economics, Lahore, Sub-Campus Multan, Pakistan.

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Published

2023-12-25

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How to Cite

Kanwal, A., SAEED, M. Z., Ahmed, Z., Saeed, M. U., Kainat Fatima, & Hameed, M. A. (2023). Composite Islamic Finance Index: A performance base measure of Islamic Financial Sector of Pakistan. Bulletin of Business and Economics (BBE), 12(4), 108-118. https://doi.org/10.61506/01.00088

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