Mehmoob Ul-Hassan (2007) explained that the main motive of this article is to analyze the efforts that have been made and measures that have been taken to Islamize the economy, specifically the banking and financial institutions in Pakistan. In this it is explained what are the factors that helped in the process of islamization and at the same time it also discussed that what factors hindered the islamization process in Pakistan. The role of Supreme Court in the establishment of Islamic Banking is also discussed. The article explains that the real motive to get a separate nation was to provide an atmosphere to the people so they can live according to the techniques which are explained in Islam. It is also explained in the article that only the term interest was replaced with profit while the procedure were remained same under the interest free banking experience. The government was not able to remove the concept of interest from the banking practices. There are explained some factors which were the main hurdle in the Islamization process, these include the Government administration, Absence of Authentic Political Support, lack of Professional Management in the Central Bank of Pakistan, the Exploitative Socio-Economic Atmosphere of the Country. There are different variables in the articles some of them are Need of Pakistan to practice Islamic Principles, the importance of Islamic finance in today’s world, teachings of Holy Quran. These were which the variables which basically promote islamization and the process of Islamic Banking. There were also some variables involved which were a hurdle in Islamic Banking, these were the Government Administration which fail to introduce any policies in this regard, Absence of Authentic Political Support, Lack of Professional in the Central Bank of Pakistan, the Exploitative Socio-Economic Atmosphere of the Country. This article is relevant to my research because in this article it is explained that what factors basically affect the trend of Islamic banking in Pakistan. For example it is explained that how Government was unable to promote Islamic Banking in Pakistan, there was no authentic political support, there was no professional management in the Central Bank. And this article also explains basically how Islamic banks operate. This article also explains various modes of Islamic Banking. Muhammad Anwar (1992) explained that how Islamic banks operates in Pakistan and in Iran. It is explained that Pakistan and Iran were seen active in Islamization process. This article also discusses the problems which these countries face while introducing Islamic Banking in their countries. This is explained in which it actually complement the previous and which is this that the only solution of the problem for these countries lies in the Islamic economic system. It is also explained that Zia regime initiated islamization of banking in 1979, primarily to seek political support of the Islamic activists. In Iran basically interest on all assets was replaced by a 4 percent maximum service charge and a 4-8 percent minimum profit rate. There was a Law for the Usury-free Banking and in this some Modes of financing were allowed and they were qard al hasan, mudharabah, civil partnership, legal partnership, hire-purchase, installment transactions, muzara’ah, mosaqaat, direct investment, forward deals, joa’lah, and debt-pruchase. And on other hand Pakistan adopted a profit and loss sharing banking system. The same thing is discussed in this article also and that is this that in Pakistan banks continues to follow the conventional practices by charging interest in the name of profit. In the conclusion it is explained that in Pakistan there are certain factors because of which the Islamic Banking did not promote in Pakistan. There are some people in Pakistan and government, banks and some business community which are reluctant to shun existing practices of conventional banks, because these individuals believe that the practices of conventional banks are more beneficial for them. Some of the variables in this article are dictation of Shariah, Government initiative and Federal Shariah Courts. These were the variables which basically promote Islamization. Other factors which prove to be a hurdle in promoting Islamic banking include Government, business community and some banks which were in favor for the conventional banks. This article is relevant to my research because it explains what causes the variation in the trend of Islamic Banking. This explains that how Islamic banking operates in Iran and Pakistan. This article also explains how different individuals prove to be a hurdle in the promotion of Islamic banking. Dr. Shamshad Akhtar (2007), explained that Islamic Finance has maintained its importance in almost 60 countries. In this it is explained that the world is also recognizing the importance of Islamic finance and in the case of Pakistan, Mr. Muhammad Ali Jinnah emphasized the importance and the virtues of Islamic principles. It is also explained that State bank plays a key role in the promotion of Islamic banking. Islamic banking basically introduces an Islamic Banking Policy. State bank felt that the need of the hour is this that currently we could not abolish the conventional banking, but what we could do is this that we can promote Islamic banking in parallel to the development of conventional finance industry. The variables in this article are the Role of Muhammad Ali Jinnah and how he encourages the Islamic principles. Another variable is the State Bank of Pakistan policies. Basically it is explained that Muhammad Ali Jinnah was of the view that if we want to prosper and we want to be successful in life then without doubt wel have to follow the guidelines of the Quran and we have fully follow the Shariah. So that’s why in his speech he encourages the government and the people to fully follow the Islamic Principles. Further in the article it is explained that SBP policies was very useful for the promotion of the Islamic Banking. And in this regard the SBP introduces Islamic Banking Policy in December 2001. And with the help of these policies, the Islamic Banking flourishes to a large extent. These variables is in accordance with my research because it explained that how different political personalities and in this regard Muhammad Ali Jinnah encourages the Islamic Principles. And it is also explained that how SBP Policies were proved to useful in the promotion of Islamic Banking. Mohamed Ariff (2001) explained the same thing that Iran and Pakistan have attempted to Islamize the entire banking system. It explained that Iran in August 1983 switched to Islamic Banking with a three year transition period. Whereas on the other hand the experience of Pakistan is totally different. Pakistan went for a gradual islamization process in 1979. In first phase banks operated on interest and no interest basis. In second phase banks operated only on the basis of no interest. In Pakistan and in some other countries where Islamic banks are working reveal interesting similarities and differences. The current accounts are operated on the basis and principles of alwadiah. Savings deposits are also working on the basis of alwadiah. There are also variations in the modes among different countries. For example musharaka is more important than murabaha in Sudan, while the reverse has been the case in Malaysia. The variable in this article is this that mainly Shariah affects the working and the efficiency of Islamic Banking. Mainly it is because of the teachings of Holy Quran that people want a way which is in accordance with the teachings of Holy Quran. This article holds a significance importance because of the fact that it shows the clear and objective relationship between principles of Quran and the efficiency of Islamic Banking. So it is true that Islamic Banking was promoted because of teachings of Islam. A.L.M Abdul Gafoor (1995), explained that the Modern banking system was confined to capital cities and it was out of the reach for the common man. So then the concept of Islamic banking and in some countries local banks were established on the same lines on which the interest based foreign banks were operating. And in this regard it was actually become impossible to avoid interaction with the banks. So Government, individuals and businesses start their dealings with banks. And in this period mainly Islamic banking gets promoted. Then it is explained that Islamic banking was managed to attract more attention because of two reasons first because of the political interest and second because at that time there emergence of young Muslim economists. It is explained that in Pakistan the development of Islamic banking was mainly an initiative of the Government. Mainly the practices of Islamic banks are almost same throughout the world, however there are small changes due to laws of that country and the individual experiences of that bank. The general features of all the Islamic banks are Deposit accounts, Current accounts, Savings account, investment accounts. And different modes of Islamic banks are Investment financing, Trade financing, lending, Services. The main variables in this article are Government influence which explains that how the interaction of government with banks promotes Islamic Banking. Then next we have Emergence of Young Muslim Economist. It is explained that when young Muslim economist emerged they felt the need of the Islamic principles and tried their best to promote Islamic Banking. Laws and Individual experiences of different banks also determine that how banks will operate in the country. This article is important for my research because it explains clearly that what factors or variables cause the trends of Islamic banking in Pakistan. It explains that Government influence is the main thing in the promotion and the progress of the Islamic banking. And very importantly the young Muslim economists play a major role in the developing the concept of Islamic banking in Pakistan. Laws of the country also affect the progress and working of Islamic banking in which it is operating. Sudin haron (1998) explained that there are more than 150 Islamic banking institutions and one interesting thing to note here is this that these institutions just don’t work only in Muslim countries but also in the Non- Muslims countries. The main of this article is to explain the operations and practices of different Islamic institutions in different Muslim countries. This study mainly focuses 11 countries including Pakistan. The Islamic banks which adopted Shariah Principles can be divided into four categories, profit and loss sharing, fees based, free services, and ancillary principles. The performance of these Islamic banks also affects from the influence of Government. And after this it is explained that the performance of these Islamic banks are affected by the demand of the customers. Because customers in any business are extremely important for that business, the main variable in this is the Needs of the Customers. It is explained that Islamic banks change their operation and policies keeping in mind the demands of the Customers. It is explained that these banks provide short, medium and long term funding facilities and because Islamic banks are not allowed to lend money on the basis of interest, so all financing were based on either profit or loss sharing or on the basis of fixed charges. This article is very important to my research because it clearly describes what my research has to cover and that is what influences the performance and working of Islamic banking. And in this case which is the Needs of the customers which influences the working and the efficiency of Islamic Banking. Mr. Paul Wouters (2008), explained the comparison of Islamic banking in Turkey, Indonesia and Pakistan. He explained that in 1985 basically there was a major change in the banking industry of Pakistan, and he explained that in 1985 all the banking in Pakistan was converted to interest free banking. But as time passes and as the performance of banking sector was evaluated then it was noted that the industry is not performing up to standard. So there was a need to bring a radical change in the system. In 2001 it was realized that Islamic banking alone is not capable of bringing growth to this industry. So in 2001 it was decided that Islamic banking should operate along with the conventional banking. So this idea was practically performed and conventional banks were encouraged to open Islamic banks. It is also explained that in the present scenario, there are large amount of Islamic banks branches in Lahore and Karachi. And it is commonly known that these banks are operating very successfully and they are also expanding day by day. In the case of Indonesia it is mentioned that those conventional banks who wish to open Islamic banks in Indonesia have to basically dedicate 5 % of their assets to these venture which are basically the Islamic banks. So it is expected that in the coming future there will be very much growth in the Islamic banking industry. In Malaysia basically Islamic industry has maintained its importance and position in the industry and it is also explained that there are separate rules and regulations for Islamic banks in Malaysia. This article is exactly in aligned with my research because this article discusses the history of Islamic banking in Pakistan that firstly the banking system entirely converted to Islamic banking, but then it is explained that this was not proved to be successful then it was decided that Islamic banks should operate side by side with conventional banks in Pakistan. Ashfaq Ahmad (2010) explained the comparison of Islamic banks with conventional banks. In the article it is explained that State Bank of Pakistan has tried a lot for the establishment of Islamic banks in Pakistan. In this regard in 2002 Meezan bank was declared and it was also registered as the first Islamic bank in Pakistan. The author basically explained that if we try to differentiate Islamic banks from conventional banks then there are three grounds on which these two can be differentiated. They are differentiated in terms of their objectives, riba and the procedures through which they take risk in their practices. It is explained in the article that there is a great chance of success for Islamic banks in Pakistan because 96% of the population in Pakistan is Muslims. And it is also mentioned that Islamic banks did experience some growth in the past. The author discusses that there are two kind of banking system in Pakistan and that are conventional banks and Islamic banks and he also added that it is observed that Islamic banks are giving tough time to the conventional banks in Pakistan. After that the author expresses that State Bank of Pakistan plays a vital role in development of Islamic banks and SBP also tries that these Islamic banks operate in accordance with the Islamic teachings. Further in the article the author explained that in the field of Islamic banks the performance of Islamic banks can be measured by the level of quality service that the banks offer. As level of quality service is directly linked to the customer satisfaction, so if Islamic banks offer quality service to their customers then the customer satisfaction level will be higher. In this research the researcher collected the date from 720 respondents which were the customers of the bank. This article is very much linked to my research because this explains that how basically Islamic banks operate and how they can basically satisfy their end consumer. In this article the main variable is the role of SBP, SBP basically organize and develop Islamic banking concept in it true sense. Agha Zohaib Khan (2009), explained that whatever banking is present in society either it is conventional or Islamic is extremely important in any country. The author explained in his article that the major difference in Islamic banks from conventional banks is this that Islamic banks operate without the concept of interest. The author explained that the religious and economic needs were basically responsible for giving birth to Islamic banking in Pakistan. It is explained that in the beginning when the system of Islamic banking was introduced in Pakistan, it was unfortunately not successful and also fall apart. Then the system was also re launched afterwards somewhere in 2002. And at this it was decided that Islamic banks should operate along with conventional banks. The author disclosed that in 2003, there was actually only 1 Islamic bank which was only offering Islamic banking and at this time 3 conventional banks were running Islamic banking branches to fulfill the need of their customers. And he further added that now 6 banks are solely for Islamic banking and there are 12 conventional banks which have their Islamic bank branches in different areas. The author explained that in a very short period of time the number of branches of Islamic banks increased rapidly. The author explained that despite of economic crisis it was considered that the growth in Islamic banking industry was more than the conventional banking industry This article is actually linked to my research in this way that it basically explains the trend of Islamic banking in Pakistan. First it explains that initially when Islamic banks were introduced they were complete failure but after some time in 2002, Islamic banks were launched again and at this time along with conventional banks. Then it is explained that in present Islamic banks are present in a large number in Pakistan. ZIAUDDIN AHMAD (1994) explained that what is the concept behind Islamic banking, he said that if we analyze the definition of Islamic banks then we come to know that it is that financial institution that work in accordance with the principles of Sharia. It is actually explained that firstly when conventional banks were present in the society at that time it was very difficult for the people to stay away from these conventional banks. But the author stated that now Islamic banks are present everywhere now and everyone who wished to live without the concept of interest then they have the option of Islamic banking. It is explained in the article that Islamic banking is the complete solution of the problem which we are facing in the present time. It is explained that if we analyze human history then we come to know that many scholars of different religions were at that time against this interest. It is explained that banking system can be operated very well without the element of interest. It is explained that the banking system is extremely important for any society because these institutions take money from those who have surplus and give money to those who have shortage of funds. It is mentioned that the banking which is present in today’s time is not very old. It is also explained that conventional banks solely operate on the basis of interest while on the hand Islamic banks operate on the concept of profit and loss sharing. This article is relevant to my search in this way that it truly state how Islamic bank operate. It clearly distinguishes that that conventional banks solely operate on the basis of interest while on the hand Islamic banks operate on the concept of profit and loss sharing. It also explains some of practices of Islamic banking. The main variable in this article is Need of Consumers for Islamic Banking.
Requirements of Customers Access to Capital Operations of Conventional banks State Bank Policies Government Regulations Government’s Influence Performance and trends of Islamic Banks Security Conditions of the Country Laws of the Country Needs of their Customers Individual bank Experiences Need to interact with other interest based banks Principles of Shariah Feed back of Customers
H0: Instability in the country do not have an impact on the Performance and Trends of Islamic Banking H0: Consumers Needs do not have an impact on the Performance of Islamic Banking H0: Government Regulations do not have an impact on the Performance of Islamic Banking H0: Laws of the country do not have an impact on the Performance and Trends of Islamic Banking H0: Performance of Conventional Banks do not have an impact on the Performance and Trends of Islamic Banking H0: Policies of State Bank of Pakistan do not have an impact on the Performance and Trends of Islamic Banking
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