Impact of Firm Size on Profitability: A Comparative Study of Islamic Bank and Commercial Bank in Pakistan

Abstract

This article shows the impact of banking size on the profitability of Commercial and Islamic Banks operating in the Pakistan for the period 2008-2012. In Pakistan Banking organizations provide fund for other organizational developments. This analysis is done in the context of firm size and profitability. Using data from 5 Commercial and 5 Islamic Banks, our observed study provides partial support to the hypothetical predictions. In study we use the measure the profitability of Commercial Bank and Islamic Bank in Pakistan like return on assets and firm size of all Banks like number of branches. The relationships between size and profitability measures are statistically show that Islamic Banks become more profitable with the respect of small size because there is no relation between Bank size and profitability. The regressions investigation that, there is optimistic association between Firm size and Profitability in Commercial Bank Ltd, but there is no relationship between firm size and profitability in Islamic Banks.