Empirical and theoretical Analysis of Digital and Islamic Banks of Pakistan

Abstract

This paper undertakes empirical and theoretical research on the functioning of digital and Islamic banks in Pakistan, focusing on the growth, models, customer satisfaction, and performance indicators. Islamic banks that operate in line with Shariah laws incorporate some profit-loss sharing mechanisms and have garnered immense growth the world over. On the other hand, digital banks operate strictly online and provide ease and efficiency through easy and fast services to their customers. This study gauges the efficacy of these banking modes in Pakistan based on metrics that include efficiency, liquidity, asset quality, and leverage ratios. The study further collected data from 293 respondents in major Pakistani cities through a well-structured questionnaire that gathered their banking experience. These results give insights into levels of customer satisfaction with the Islamic banks posting impressive performances in many aspects. The paper assumes significance in the continued study of both Islamic and digital banking systems as they affect consumer behavior and the financial sector, with the importance of addressing more current issues arising within the limited sample size and data collection techniques. Islamic banking in Pakistan has seen the light of the day, and in countries with Islamic dominance, further innovation and growth should be nurtured, perhaps to match consumer demand and upcoming challenges in regulation. Islamic banks can further their competitive advantage with strides in technology, openness, and innovation in their services.