The Worldwide Financial Crisis: An Analysis of Financial Performance from the Banking Sector of Pakistan

The global financial crisis (GFC) of 2007-2008, which started in the USA and quickly spread worldwide, caused major disruptions in many countries' economies. This study focuses on evaluating the financial performance of Pakistan's banking sector before and after the crisis, spanning from 2004 to 2013. Both Islamic banks (IBs) and conventional banks (CBs) were analyzed, looking at variables like return on assets, investments, solvency, liquidity, deposits, asset quality, advances, and total asset size. A stepwise panel regression model was used for the analysis. The results show that asset quality and advances had a positive effect on return on assets, while solvency, liquidity, investments, deposits, and total asset size had a negative impact. Comparisons between the pre-crisis (2004-2008) and post-crisis (2009-2013) periods suggest that the global financial crisis had an insignificant effect on the financial operations of Pakistan's banking sector.