Risk Management Practices of Islamic Banks in Pakistan

Abstract

The main focus of the research was finding out the extent to which banks were utilizing risk management practices in managing different risks and assessing management of risk measures of Islamic banks of Pakistan. This was an empirical research study which employed quantitative research methods. Secondary data of five banks was collected by using content analysis through annual reports from 2009 to 2014. Data was analyzed by using descriptive statistics and regression analysis. The dependent variable was liquidity risk and age, profitability, leverage, tangibility and size were used as independent variable. It was found that liquidity risk was mainly defined by leverage, tangibility and age. However, it showed a statistically insignificant relationship between size, profitability and liquidity risk. This research will be useful for Islamic banks, conventional banks, practitioners as well as from academic point of view.