Article Published In Vol.8 (July-Aug 2020)

Measuring Financial Permanency of Firms in Emergent Economy: A Comparative Study on Financial Institutions of Pakistan

Author : Fiaz Ahmad, Rana Tanveer Hussain and Dr Sajid Mahmood Shahzad

Financial institutions play vital part in the development and advancement of the economy especially in emerging countries. Islamic products are very scorching contemporary issues although the Sharia based assets are having very low fraction in the global economy. The motive of this study is to calculate the financial longevity and soundness of financial institutions of Pakistan. For the said aim, this study used yearly data of Islamic banks, Modaraba firms and interestbased banks of Pakistan from 2013 to 2018 and measured the financial stability of the financial institution applying the Modified Altman Z-score model. Findings of the study asserted positive results with respect to financial soundness of all Islamic Banks and Interest-based banks as their Z-scores were demonstrated in stable zone over the period whereas most of the modaraba firms were also showing financial soundness during the period except two of them in inconclusive. This portray that all the financial institutions of Pakistan are dealing with their financial assets proficiently This study is helpful for the stakeholders of the institutions to decide strategically about their stake.

Keywords: Financial longevity, Altman Z-score, Assets