Deposits of Conventional and Islamic Banks in Perception of Macroeconomics Variables in Pakistan

Abstract

This research examines the effect of various macroeconomics variables on deposits of both conventional along with Islamic banks in Pakistan. The data has been taken from conventional banks, Islamic Banks, state bank of Pakistan and Economic Survey of Pakistan from the period of 2006-2015. The ARDL technique is applied to find the association among the deposits in conventional, Islamic banks and macroeconomics variables. The outcomes of this research work demonstrates that interest rate, profits of Islamic banks, inflation, real exchange rate, lending rate have different affect on deposits of conventional and Islamic bank. This study reveals that religious factor is most important to attract depositors towards Islamic banks. This study gives suggestion that Islamic banks collect maximum deposits than conventional banks if Islamic banks offer more competitive rates of profit than conventional banks.