Comparison of Credit Risk Management Practices among Islamic and Public Commercial Bank’s in Pakistan

Abstract

The main objective of this research is to explain a topic in credit risk management practices. Furthermore, this research evaluates credit risk management practices in Pakistani banks. In addition, it compares and evaluates the techniques used by currently operating Islamic banks and public commercial banks. Quantitative research methods were used in the present study. A total of 400 self-administrated questionnaires have been distributed among Pakistani employee-selected banks. SPSS version 24 has been used to analyze responses using correlation, regression, and t-tests. The purpose of this research is to observe the major elements that impact credit risk management practices, which include credit risk understanding, credit risk identification, credit risk assessment, credit risk monitoring, and credit risk analysis showing that each of these elements promoted credit risk management practices among certain institutions. This study also examined the combined impact of these five variables on Pakistan's currently operating Islamic banks and public commercial banks. Finally, there are different approaches to practicing credit risk management among various institutions. The research also produced a framework for practices of credit risk management and a survey-based instrument, both of which are significant contributions.