Journal articles on the topic 'Islamic and conventional banks'
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1
Alzoubi, Tariq. "Determinants of bank profitability: Islamic versus conventional banks." Banks and Bank Systems 13, no. 3 (September 12, 2018): 106–13. http://dx.doi.org/10.21511/bbs.13(3).2018.10.
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This research analyzes the determinants of bank profitability by investigating the internal factors that affect the profitability of Islamic banks and conventional banks. It then compares the results from the two types in order to understand how they differ from each other. As previous researchers focus on either Islamic or conventional banks, this research will analyze both by comparing how they are each influenced by profitability factors. Few researches have attempted to compare the profitability of Islamic and conventional banks using a relatively small sample. This research uses a fixed effect panel data analysis on a large sample of 68 banks (42 Islamic and 26 conventional banks) from 13 MENA countries, covering the period of 2006 until 2016. Using several variables, including bank size, equities to assets, loans to assets, deposits to assets, cash to assets and securities to assets, the results show that bank size, equities to assets and deposits to assets have a significant positive effect on Islamic banks’ profitability, while they have a significant negative effect on conventional banks’ profitability; loans to assets and cash to assets have no effect on bank profitability for either Islamic or conventional banks; and securities to assets has a significant negative effect on Islamic banks’ profitability, while it has a significant positive effect on conventional banks’ profitability. The results also show that bank size, equities to assets, deposits to assets and cash to assets contribute more to Islamic banks’ profitability compared to conventional banks, while loans to assets and securities to assets contribute more to conventional banks’ profitability compared to Islamic banks.
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Misni, Latifah Syaqirah, Masturah Ma'in, and Siti Sarah Mat Isa. "Off-Balance Sheet Income Activities For Islamic And Conventional Banks." Journal of Emerging Economies and Islamic Research 3, no. 3 (September 30, 2015): 58. http://dx.doi.org/10.24191/jeeir.v3i3.9068.
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The aim of this study is to investigate the determinants of off-balanced sheet income activities, considering the bankspecific and macroeconomic factors as independent variables in Islamic and conventional banks in Malaysia. This study utilizes 16 Islamic banks and 14 conventonal banks panel data from 2008-2013 and 2002-2013 respectively. The result shows that the determinants of off-balance sheet activities in Islamic banks in Malaysia are bank’s size (TA), bank’s profitability (NP), and interest rate (INT). While, the determinants of off-balance sheet activities in conventional banks are bank’s size (TA), bank’s profitability (NP) and the Real Gross Domestic Product (RGDP).
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Khan, Shahbaz, Nida Baig, Shahzad Hussain, and Ajid Ur Rehman. "Strength of Bank-Firm Nexus: Evidence from Islamic and Conventional Banks." Journal of Islamic Business and Management (JIBM) 10, no. 01 (June 30, 2020): 96–109. http://dx.doi.org/10.26501/jibm/2020.1001-007.
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Al-Harby, Ahmad. "Factors Affecting Capital Structure of Conventional and Islamic Banks: Evidence from MENA Region." Global Review of Islamic Economics and Business 7, no. 2 (December 31, 2019): 069. http://dx.doi.org/10.14421/grieb.2019.072-02.
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This study aim is to investigate and compare the factors affecting conventional and Islamic bank’s capital structure choice as well as their financial characteristics. According to the best of my knowledge, this is the first paper that mainly concentrated in comparing the determinants of capital structure of conventional and Islamic banks using a cross-country data and for a long period of time (20 years). The study revealed several findings. Firstly, descriptive statistics (equality of means test) showed that conventional banks more leveraged and liquid than Islamic banks. In contrast, Islamic banks are larger and more profitable (ROA) than conventional banks. The results also indicated that Islamic banks are not riskier than conventional banks. Secondly, the regression results showed that all variables, except tax-shield, had the same impact on both banking types capital structure. It been found that profitability, tangibility, business risk and age correlated negatively and significantly with capital structure. In the other direction, size, liquidity and inflation had significant and positive relation with capital structure. Vis-à-vis tax-shield, this variable had a weak impact (positive) on Islamic bank’s capital structure but had no effect on conventional banks and this attributed to Islamic banks sample.
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Rizwan, Rabeea. "PERFORMANCE COMPARISON OF ISLAMIC BANKS AND CONVENTIONAL BANKS IN PAKISTAN." International Journal of Islamic Banking and Finance Research 5, no. 1 (June 3, 2021): 34–41. http://dx.doi.org/10.46281/ijibfr.v5i1.1155.
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The objective of this paper is to compare and analyze the performance of Islamic Banks and Conventional Banks operating in Pakistan during the 5 year period of 2015-2019. This study utilizes the CAMEL approach to assess and compare the performance of Islamic Banks and Conventional Banks in Pakistan using a sample of banks. For the purpose of this study, we have used a sample of 4 Conventional banks and 4 Islamic Banks that are operating in Pakistan. All the relevant information for the purpose of comparison for this study was collected from the annual reports of these sample banks which were available on the respective bank’s website. The findings of this study indicate that in Pakistan, Islamic banks have performed better in terms of asset quality and earnings than the conventional banks whereas the conventional banks had a better performance in terms of liquidity, management efficiency and capital during the five-year period of consideration. The findings of the analysis also showed that Islamic banks in Pakistan have shown significant growth over the 5 year period 2015-2019.
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Samad, Abdus. "“Is there any Causality between the Islamic Banks’ Deposit Returns and the Conventional Banks’ Interest Rates? Evidence from Malaysian Commercial Banking”." International Journal of Economics and Financial Issues 12, no. 3 (May 17, 2022): 18–28. http://dx.doi.org/10.32479/ijefi.13003.
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This paper examined and compared the Islamic banks’ time series rates of return to depositors, 1-month, 3-month, 6-month, 9-month, and 12-month as well as the rate of return on Islamic Bank's Mudharabah saving and with the conventional banks’ similar time series deposit interest rates during 2001-2015. Non-cointegration of monthly and quarterly series of deposit interest rates, established by Johansen Cointegration test, led to the VAR Granger causality test which showed unidirectional causality running from the conventional banks’ deposit interest rates to the Islamic banks’ rate of returns. The establishment of cointegration for the conventional bank and the Islamic bank series of 6-month, 9-month, and 12-month as well as saving deposit rates series by Johansen Cointegration test led to the VEC model which establishes the short term dynamics and the stability of long run equilibrium between the rates of return of Islamic banks and interest rates of the conventional banks. The Vector Error correction results showed the speed of convergence varied from 18 percent to 24 percent. The results of the VEC Granger causality /Wald test (F-test) found unidirectional causality i.e. the direction causality running from conventional banks’ interest rate to the Islamic bank’s rate of return in all series, 6-month, 9-month, 12-month, and the saving deposit.
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Jaara, Bassam Omar Ali, Mohammad A. AL-Dahiyat, and Ismail AL-Takryty. "The Determinants of Islamic and Conventional Banks Profitability in the GCC Region." International Journal of Financial Research 12, no. 3 (January 11, 2021): 78. http://dx.doi.org/10.5430/ijfr.v12n3p78.
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The purpose of this study is to examine the factors affecting the profitability levels of commercial banks whether Islamic and non-Islamic over the period 2000-2018, to suggest ways to enhance the Islamic and non-Islamic banks profitability levels’ in the GCC countries. This research employed Bivariate analysis and panel regression in the investigation process. The study employed return on assets ratio as a proxy for banks profitability. The study found out that conventional banks are more efficient than Islamic banks in terms of profitability levels. There are substantial variances between both Islamic and conventional banks in terms of the determinants of banks' profitability. It is found that 89% of the Islamic bank’s profitability and 85% of conventional banks profitability influenced by bank size, market to book value, capital ratio, cash to assets, gross domestic product GDP, GDP growth, and inflation.
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Jaara, Bassam Omar Ali, Mohammad A. AL-Dahiyat, and Ismail AL-Takryty. "The Determinants of Islamic and Conventional Banks Profitability in the GCC Region." International Journal of Financial Research 12, no. 3 (January 11, 2021): 78. http://dx.doi.org/10.5430/ijfr.v12n3p78.
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The purpose of this study is to examine the factors affecting the profitability levels of commercial banks whether Islamic and non-Islamic over the period 2000-2018, to suggest ways to enhance the Islamic and non-Islamic banks profitability levels’ in the GCC countries. This research employed Bivariate analysis and panel regression in the investigation process. The study employed return on assets ratio as a proxy for banks profitability. The study found out that conventional banks are more efficient than Islamic banks in terms of profitability levels. There are substantial variances between both Islamic and conventional banks in terms of the determinants of banks' profitability. It is found that 89% of the Islamic bank’s profitability and 85% of conventional banks profitability influenced by bank size, market to book value, capital ratio, cash to assets, gross domestic product GDP, GDP growth, and inflation.
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Adriansyah, Ahmad, Fathoni Zoebaedi, and Ramzi A. Zuhdi. "Does the Principle of Running a Business in Conventional Vs Sharia Become Differentiator? Study on Banking Industry in Indonesia 2009 - 2014." Jurnal Ilmu Manajemen & Ekonomika 8, no. 2 (June 30, 2016): 116. http://dx.doi.org/10.35384/jime.v8i2.10.
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Comparing to conventional bank, Islamic banking industry in Indonesia relatively still in the early development stage. Islamic bank is different with conventional bank, and therefore there is a special regulation for Islamic bank. Research conducted in 22 countries (including Indonesia), shows that Islamic banking and has differences with conventional banking in term of business orientation, efficiency, asset kuality and stability. But other research 13 countries (not including Indonesia), show that Islamic banking’s performance is lower than conventional banking (Ariss, 2010). Islamic banking in Indonesia has a unique characteristic. Most of Islamic banking in Indonesia is converted from conventional bank, owned by conventional bank or originated from a conventional bank. Some resource of Islamic bank comes from conventional banking even some of them still using resource from their conventional bank as their parent. This result raises a question, whether in the context of Islamic banking in Indonesia, its performance is significantly different from conventional banks. To answer the research questions above, we do a t-test on ROA and ROE Islamic banks and conventional banks from 2009-2014. The results showed that there was no significant difference between the financial performances of Islamic banks with conventional banks, except for 2014. In 2014 Islamic bank’s ROE is lower than conventional banks. This research opens the opportunity to study the factors that could cause a difference in the performance of Islamic banks vs conventional banks.
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Ali, Asif, Malik Fahim Bashir, and Muhammad Asim Afridi. "Do Islamic Banks Perform Better than Conventional Banks?" Turkish Journal of Islamic Economics 8, no. 1 (February 15, 2021): 1–17. http://dx.doi.org/10.26414/a082.
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This study aims to compare the performance of Islamic and conventional banks in Pakistan for the period 2007-2016. For the purpose, the study first employs CAMELS composite rating to find the ratios to highlight the managerial and financial performance of the banks. The study then uses logistic regression technique for the performance comparison of Islamic and Conventional banks. The composite rating results reveal that both Islamic and conventional banks fall in rank 3 and need help from regulatory authorities to improve the performance of banking sector in Pakistan. Furthermore, the logistic regression results reveal that Islamic banks perform well in asset quality, management adequacy and sensitivity to market risk whereas conventional banks are efficient in capital adequacy and liquidity. Robustness of results is achieved by performance comparison of the same size Islamic and conventional banks. This analysis is important because Pakistan’s banking sector is hybrid where both Islamic and conventional banks work in the same environment and under the same regulator. Findings of this study are not only useful for Islamic and conventional banks operating in Pakistan but would also help the policymakers in devising future policies.
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M. Hafez, Hassan, and Mona Halim. "The efficiency of Islamic banks versus conventional banks: an empirical study of an emerging economy." Banks and Bank Systems 14, no. 2 (May 17, 2019): 50–62. http://dx.doi.org/10.21511/bbs.14(2).2019.05.
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The purpose of this study is to investigate the efficiency of two different banking systems operating in Egypt (Islamic versus conventional banks). A sample of 35 banks has been used to examine the technical efficiency before and after the financial crisis using data envelopment analysis model. Evaluating the technical efficiency of Egyptian banks will enable policymakers to support which banking system is more efficient to facilitate the financial inclusion and enhance the economic development.Before the financial crisis, conventional banks outperformed conventional banks with Islamic windows and Islamic banks, scale technical efficiency outperformed pure technical efficiency when analyzing conventional banks and conventional banks with Islamic windows. In terms of Islamic banks, pure efficiency outperformed scale efficiency. After the financial crisis, technical efficiency of all banks decreased. However, pure technical efficiency of Islamic banks has improved as a result of the quality of management and outperformed both conventional banks and conventional banks with Islamic windows. These results imply that Islamic banks have not been affected by the financial crisis. Therefore, the increased adoption and support of the Islamic banks in Egypt is addressed to develop the economy and push forward entrepreneurship projects, support the financial inclusion and the informal economy integration.
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Ahmad, Shahrizan Adzham, and Al-Hasan Al-Aidaros. "CUSTOMER AWARENESS AND SATISFACTION OF LOCAL ISLAMIC BANKS IN MALAYSIA." International Journal of Islamic Business 2, no. 2 (December 31, 2017): 18–37. http://dx.doi.org/10.32890/ijib2017.3.2.2.
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This article explores the awareness and satisfaction of Islamic bank customers in Malaysia with respect to the banks’ marketing practices and effectiveness which differentiate them from conventional banks. It explores the satisfaction of customers of Islamic banks through the customers’ perception of the quality of the banks’ products and services. This study was conducted in response to pessimistic feedbacks about Islamic banks’ business operations which are not only required to comply with conventional business laws, but also need to give up any business prospects that are against with Shariah (Islamic law). Thus, it is argued that the marketing and advertising strategies of Islamic Banks face restricting guidelines which makes competition with their conventional counterparts (conventional banks) harder. Nevertheless, Islamic banks are strengthening their position by creating greater acceptance of their products among Muslims and Non-Muslims. Based on the descriptive analysis conducted using the data collected from a questionnaire survey of 400 respondents, this study found that a majority of the respondents are already customers of Islamic banks but they are not fully conversant with the principles of Islamic banking. The findings suggest that Islamic banks have to pay greater attention to measuring their marketing effectiveness and customer satisfaction so as to remain relevant in the marketplace.
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Alandejani, Maha, Ali M. Kutan, and Nahla Samargandi. "Do Islamic banks fail more than conventional banks?" Journal of International Financial Markets, Institutions and Money 50 (September 2017): 135–55. http://dx.doi.org/10.1016/j.intfin.2017.05.007.
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Ozdincer, Begumhan, and Ayse Yuce. "Stakeholder Returns of Islamic Banks Versus Conventional Banks." Emerging Markets Finance and Trade 54, no. 14 (July 24, 2018): 3330–50. http://dx.doi.org/10.1080/1540496x.2017.1393746.
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Hadziq, M. Fuad, Yosi Mardoni, and Moh Khoirul Anam. "Santri Perception to Islamic Bank: Are there no Differences with Conventional Banks?" Afkaruna: Indonesian Interdisciplinary Journal of Islamic Studies 17, no. 2 (December 24, 2021): Layouting. http://dx.doi.org/10.18196/afkaruna.v17i2.12752.
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Several studies show no difference in practice and academics in general between Islamic banks and conventional banks. However, they are both very different. This research analysed the perceptions of santri/students of Islamic boarding schools regarding no differences between Islamic banks and conventional banks. This research was quantitative with an in-depth descriptive analysis. The research sample used a blend of purposive and judgment techniques applied to santri from several large Islamic boarding schools in Banyuwangi. The analytical method used a two-way causative relationship using multiple regression. The research used a structured questionnaire with a Likert scale and in-depth interviews with santri. Santri's view of Islamic banks differed from that of regular banks. Santri strongly believes in Islamic banking, while the majority is not traditional but represents Islamic ideals. Islamic bank workers, nevertheless, have shown Islam's greater identity than standard banks and imply that no disparities in Islamic banks are shown to be stigmatic.
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Kazim, Rizwan. "Profitability of Islamic banks verses conventional banks in Pakistan." Sociology International Journal 6, no. 2 (April 22, 2022): 47–55. http://dx.doi.org/10.15406/sij.2022.06.00263.
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This research study analyzes the profitability of Islamic banks versus conventional banks in Pakistan from 2006 to 2020. The main objective of this study was to examine the profitability of three Islamic banks, Bankislami, Dubai Islamic Bank Ltd, and Meezaan Bank, whereas three conventional banks like Habib Bank Limited (HBL), Muslim Commercial Bank (MCB), United Bank Limited (UBL) in Pakistan from the year 2006 to 2020. This study investigates whether Islamic banks are performing well in Pakistan compared to conventional banks. Ratio analysis has been used to measure profitability, and two variables have been used, ROA and ROE, to measure the banking sector's profitability. The study concluded that Islamic banks were more profitable during the year 2007-2008 only while conventional banks were more profitable in the year from 2006- 2015 except 2008, in respect of ratio analysis, although in the year 2007-8 performance and profitability of Islamic banks are suitable according to the overall results conventional banks are more efficient and profitable than Islamic banks in Pakistan.
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Omnia Ahmed, Omnia Ahmed. "Customer Satisfaction Comparison between Islamic and Conventional Banks: Case Study of Qatari Banks." journal of king Abdulaziz University Islamic Economics 31, no. 2 (July 2, 2018): 17–32. http://dx.doi.org/10.4197/islec.31-2.2.
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This paper examines customer satisfaction in Islamic banks in Qatar in comparison with their conventional counterpart. It is an attempt to investigate whether Islamic banks have overcome the obstacle of being relatively new; whether they have started providing satisfying services to their customers or whether they act as taking advantage of their customers’ needs for Islamic finance products and treat them as captive clients who resort to Islamic banks for religious reasons. The research queries needed to be answered by the bank’s customers themselves to test their view of the services they get. A comprehensive comparative questionnaire was formulated. Responses from the questionnaire and other data collected from banks’ websites, personal interviews, etc., were analyzed. The paper conducted cross-sector comparisons of Islamic and conventional banking as well as individual comparisons between banks. Analysis of these results, computing averages and comparing them at the level of each bank as well as at the sectoral level between Islamic banks and conventional banks, was conducted. Through this, the paper attempts to uncover banks’ performance and find out all areas of improvements that the Islamic and conventional banks need to work on.
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Shaikh, Ameenullah, Saqib Sharif, and Imtiaz Arif. "Comparison of Islamic Banks with Conventional Banks: Evidence from an Emerging Market." Journal of Management Sciences 3, no. 1 (March 2016): 22. http://dx.doi.org/10.20547/jms.2014.1603102.
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Witjaksono, Armanto, and Anis Yunistriani. "Analisis Komparatif Kinerja Keuangan antara Bank Syariah dan Bank Konvensional Berdasarkan Metode Camel." Binus Business Review 2, no. 1 (May 30, 2011): 485. http://dx.doi.org/10.21512/bbr.v2i1.1155.
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The main objective of this paper is to give an overview of comparative financial performance of Islamic banks with conventional banks based on the CAMEL method. The main question would be answered to know there is difference in the performance of conventional banking and Islamic banking are analyzed by using the ratio CAMEL. To prove the hypothesis that there is no significant difference between the bank's financial performance Islamic and conventional banks (Ho) or there are significant differences between the financial performance of Islamic banks and conventional banks (Hi). Researchers used a parametric statistical technique, which consists of test data normality using the Kolmogorov Smirnov test and QQ plots, test of homogeneity using the F test (Levene's Test), and Independent Sample T-Test with significant value 5% confidence level (1 - α) = 95%. The results showed that the ratio of data CAMEL Islamic banks and conventional banks in normal distribution and homogeneous. Then it can be concluded that the variable CAR, NPL, and LDR between conventional banks and Islamic banks have significant differences, while the ROA and ROE of the two types of banking industry is not significantly different or relatively the same.
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Al-Kayed, Lama Tarek. "Dividend payout policy of Islamic vs conventional banks: case of Saudi Arabia." International Journal of Islamic and Middle Eastern Finance and Management 10, no. 1 (April 18, 2017): 117–28. http://dx.doi.org/10.1108/imefm-09-2015-0102.
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Purpose This paper aims to identify the factors that affect dividend payments for Saudi Arabian Islamic and conventional banks and to test whether the factors that affect Islamic banks’ dividend policy differ from the factors affecting conventional banks’ dividends. Design/methodology/approach Panel regression was run on data for six Islamic banks and six conventional banks. Findings The paper found that profitability, lagged dividends and leverage are all significant determinants of Islamic Banks’ dividend policy. Lintner’s (1956) model applies to Islamic bank’s dividend policy, as Islamic banks who payout dividends commit to their payments. All factors included in the study (profitability, liquidity, leverage, growth and lagged dividend) are found to be significant determinants of conventional banks’ dividend payments. Research limitations/implications Future research should include ownership variables in the regression to test the agency theory regarding dividends. Ownership variables were not included in the study because of data availability issues. Practical implications The results of this study have practical implications for analysts, investors and regulators. For Islamic banks to compete in the local and global deposit markets, their management must carefully decide upon their dividend policy. As conventional banks are distributing stable dividends, it is time for Islamic banks to plan for a stable dividend policy to send positive signals to the market. As newcomers to the market Islamic banks should avoid spontaneous and inconsistent dividend distributions that do not carry any signals to the market. It will be difficult for Islamic banks to raise capital or attract investors because of their lower dividend yields compared to conventional banks. Boards of directors of Islamic banks should use dividends as an agency monitoring device; large-scale retention of earnings encourages behaviour by managers that does not maximize shareholder value. Dividends, then, are a valuable financial tool for these firms because they help firms avoid asset/capital structures that give managers wide discretion to make value-reducing investments. Originality/value This is the first study – up to the author’s knowledge – to investigate the financial institutions (banks) dividend policy in Saudi Arabia.
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Buallay, Amina. "Intellectual capital and performance of Islamic and conventional banking." Journal of Management Development 38, no. 7 (August 12, 2019): 518–37. http://dx.doi.org/10.1108/jmd-01-2019-0020.
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Purpose Intellectual capital (IC) is considered as a lifeblood of the high-tech and knowledge-based sectors. Therefore, there is a great need to highlight the importance of IC in the banking sector. Since the banking sector in the gulf countries is mainly based on Islamic and conventional banking, the purpose of this paper is to provide a comparative empirical analysis between IC efficiency in Islamic and conventional banks, and its impacts on a bank’s operational, financial and market performance. Design/methodology/approach This study examined 59 banks for five years to end up with 295 observations. The independent variable is the modified value added IC components; the dependent variables are performance indicators (return on assets, return on equity and Tobin’s Q). Two control variables are utilized in this study: bank-specific and macroeconomic. Findings The findings deduced from the empirical results demonstrate that there is a positive relationship between IC efficiency and financial performance (ROE) and market performance (TQ) in Islamic banks. However, in conventional banks, there is a positive relationship between IC and operational performance (ROE) and financial performance (ROE). Originality/value The results of this study can be used to present a successful model for the Islamic and conventional banks to concentrate more on the role of IC in enhancing the bank’s performance. In addition, the results of this study may provide a wake-up call for Islamic banks to examine the reasons for the imperfect relationship between the IC and asset efficiency (ROA), as well as for conventional banks to examine the reasons for an imperfect relationship between the IC and market value (TQ).
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H. Omar, Habiba, and Mohd E. Yusoff. "Central bank impact on practicing Mudarabah financing in Islamic banks: the case of Tanzania." Banks and Bank Systems 14, no. 1 (February 25, 2019): 81–93. http://dx.doi.org/10.21511/bbs.14(1).2019.08.
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This paper investigates the challenges faced by Islamic banks in practicing Mudarabah financing under conventional regulatory regime by interviewing eleven Islamic bank managers from three selected banks. Thematic data analysis was employed to understand hindrances for Islamic banks in operating Mudarabah financing under conventional regulatory regime. Findings of the study have provided a number of major challenges that hinder Islamic banks performance in Tanzanian context. The challenges include irregularities of policies and regulations, non-supportive operational and technical structure, and missed perceptions of Mudarabah among the public. However, a new challenge of the impact of the central bank on Islamic banks was identified. It is expected that Tanzanian Islamic banking performance will enhance if the central bank introduces sharia regulations for Islamic banking, initiates the central sharia supervisory board, and harmonize country regulations with financial regulations regarding Islamic perspectives.
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Khan, Tauseef, Waqar Ahmad, Muhammad Khalil Ur Rahman, and Fazal Haleem. "An Investigation of the Performance of Islamic and Interest Based Banking Evidence from Pakistan." HOLISTICA – Journal of Business and Public Administration 9, no. 1 (May 1, 2018): 81–112. http://dx.doi.org/10.1515/hjbpa-2018-0007.
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Abstract The main difference between Islamic and conventional banking is that Islamic banking works on profit and loss while conventional banking work is interest based. The aim of this research study is to measure and compare the financial performance of Islamic and conventional banking in Pakistan during 2006 to 2015. This study is to examine and to evaluate the performance of 5 Islamic banks (Meezan Islamic Bank, Bank Islami Limited, Al Baraka Islamic Bank, Dubai Islamic Bank Limited and Burj Bank Limited) and 5 conventional banks (Muslim Commercial Bank Limited, United Bank Limited, Askari Bank Limited, Allied Bank Limited, Habib Bank Limited) in terms of profitability, liquidity, risk, capital and efficiency. We used quantitative and qualitative data for comparison of Islamic and conventional banks. Collection of data consists on both primary as well as secondary sources. Primary data has been gathered from interviews and Secondary data has been gathered from the balance sheets and income statements of the sampled banks for the period of 2006 to 2015.Financial ratios such as profitability ratios, liquidity ratios, solvency ratios, capital ratios and efficiency ratios are used for measure of the financial performance of both banking sector. The results indicate that Islamic banks are less profitable, more liquid, less risky and less efficient. There is no significant difference in terms of capital between Islamic and conventional banks.
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Imdadul Haque, Mohammad, Mohammad Rumzi Tausif, and Anis Ali. "Continued discussion on conventional versus Islamic banks: combining financial ratios and efficiency." Banks and Bank Systems 15, no. 1 (March 25, 2020): 132–42. http://dx.doi.org/10.21511/bbs.15(1).2020.13.
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Two different types of banking systems, Islamic and conventional, dominate the banking structure in Saudi Arabia. The purpose of this paper is to contribute to the ongoing debate as to which of the two is better. Using data for the period 2014–2018, the study compares Islamic and conventional banks. It combines traditional financial ratios, Return on Assets (ROA) and Return on Equity (ROE), with Data Envelopment Analysis (DEA) to perform a comprehensive analysis. In terms of ROA, the performance of conventional banks is better than that of Islamic banks, but in terms of ROE, vice versa. DEA results show that conventional banks are more efficient than Islamic banks. In fact, in terms of ROA and ROE, Al Rajhi Bank, an Islamic bank, is the best performer. But in terms of efficiency scores from DEA, Al Rajhi ranks seventh among all banks, while NCB, a conventional bank, ranks first. Issuing shares and utilizing funds in profitable options, such as loans and advances to increase net income, are the policy recommendations for Islamic banks to further improve. In addition, as the study finds no correlation between the ratio and efficiency scores, it proposes to use a combined measure of ratio analysis and efficiency analysis for a comprehensive assessment of bank performance.
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Wahid, Muhamad Azhari. "Comparing the competition of Malaysia Islamic and conventional banks." Journal of Islamic Accounting and Business Research 8, no. 1 (February 13, 2017): 23–40. http://dx.doi.org/10.1108/jiabr-06-2015-0022.
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Purpose This study aims to analyse three main questions within the Malaysian banking system: Are Islamic banks more competitive than conventional banks? What are the levels of competition for Islamic and conventional banking sectors pre, during and post the 2007-2009 global financial crisis? Does penetration of Islamic banks affect the competitive structure of conventional banks? Design/methodology/approach In measuring a bank competition, the author estimates the Panzar–Rosse H-statistic (PRH) method on 17 Islamic and 21 conventional banks in Malaysia over the period of 2004-2013. This is then followed by ordinary least squares (OLS) robust regression analysis to control Islamic banks’ penetration, bank-specific and macroeconomic factors. Findings Results from the PRH method (total revenue) suggest that Malaysian Islamic banks are relatively more competitive than their conventional counterparts. Furthermore, the author observes that the level of competition for both Malaysian Islamic and conventional banks increased tremendously during the 2007-2009 global financial crisis. This suggests the impact of the crisis on the level of competition for both banking systems. Finally, the OLS robust regression suggests that Islamic banks’ penetration has a significantly positive impact on the level of competition for conventional banks. The PRH estimation using total interest income indicates similar results, suggesting the robustness of these results. Practical implications This study reveals whether Islamic banks’ penetration is able to increase the level of competition within the conventional banking sector. Knowledge on this is important to the policymaker. Originality/value To the best of the author’s knowledge, this is the first study using the PRH method in comparing the level of competition for Malaysian Islamic and conventional banks. Furthermore, this is the first study analysing the impact of Malaysian Islamic banks’ penetration on the level of competition for conventional banks.
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Widarjono, Agus, M. B. Hendrie Anto, and Faaza Fakhrunnas. "Is Islamic Bank More Stable Than Conventional Bank? Evidence From Islamic Rural Banks in Indonesia." International Journal of Financial Research 12, no. 2 (January 11, 2021): 294. http://dx.doi.org/10.5430/ijfr.v12n2p294.
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This study investigates whether Islamic rural banks perform better than conventional rural banks as their competitor in Indonesia. To measure Islamic rural banks' financial performance, we apply financial stability using Z-score and profitability using the return on assets. We use monthly time series data from January 2009 to December 2018. The dynamic regression of the Autoregressive Distributed Lag (ARDL) model is then employed. The results report that the Z-Score of Islamic rural banks is higher than the Z-Score of conventional rural banks. This finding shows that Islamic rural banks are less risky than conventional rural banks. However, the Islamic rural banks' financial stability is very vulnerable to changes in equity, output, and inflation than conventional rural banks. Although the Islamic rural banks' profit rate is lower compared to conventional rural banks, it is considered more stable. The profit of Islamic rural banks is affected by size, equity, domestic output, and inflation.
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Hachem, Boutheina, and Hiyam Sujud. "Islamic Versus Conventional Banks in Lebanon: An Empirical Study of Credit Risk Management." International Journal of Economics and Finance 10, no. 8 (June 30, 2018): 53. http://dx.doi.org/10.5539/ijef.v10n8p53.
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The aim of this research is to compare conventional and Islamic banks in various aspects of credit risk management processes. The study used 200 questionnaires, collected from 21 traditional banks and 4 Islamic banks in Lebanon. The results found that differences in the various issues of credit management between Islamic and conventional banks. Islamic banks are more understanding, aware, and cautious in their approach than traditional banks. Islamic banks are more efficient in assessing and analyzing credit risk than conventional banks. Lastly, Islamic banks are more used to credit risk mitigation than traditional banks.
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Alshammari, Turki. "Performance differences between Islamic and conventional banking forms." Banks and Bank Systems 12, no. 3 (October 30, 2017): 237–46. http://dx.doi.org/10.21511/bbs.12(3-1).2017.08.
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This paper strives to recognize the possible performance differences between the two popular banking forms in the Gulf Cooperation Council (GCC) countries. Applying different methodologies on the data that span the period 2003–2015, this study docu¬ments significant differences with respect to the period, countries, and performance measures. Specifically, conventional banks in GCC countries outperform their Islamic counterparts in profitability. Also, bank specific factors such as liquidity, capital ad¬equacy, bank size and growth all affect the profitability. In addition, GCC conventional and Islamic banks were isolated from the 2008 subprime crisis even though their prof¬itability seems to be decayed differently over the period of the economic downturn.
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Mohsan Khan, Tahseen, Mohsan Khan Rizwan, Saima Akhtar, and Syed Waqar Azeem Naqvi. "How Efficient is the Islamic Banking Model in Pakistan?" Lahore Journal of Business 6, no. 1 (September 1, 2017): 111–25. http://dx.doi.org/10.35536/ljb.2017.v6.i1.a6.
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The purpose of this study is to analyze the conventional and Islamic banking in Pakistan. For this study, a sample of 19 conventional banks and five Islamic banks was selected. The CAMEL approach is used to evaluate the performance of both conventional and Islamic banks. Ten ratios were used to measure profitability, liquidity and credit risk. Our findings suggest that Islamic banks are less efficient than conventional banks in asset management, management capability and liquidity. Conventional banks have better earning capability in terms of return on assets and overhead ratios. The analysis also shows that Islamic banks have better capital adequacy than conventional banks.
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RISFANDY, TASTAFTIYAN, WAHYU TRINARNINGSIH, HARMADI HARMADI, and IRWAN TRINUGROHO. "ISLAMIC BANKS’ MARKET POWER, STATE-OWNED BANKS, AND RAMADAN: EVIDENCE FROM INDONESIA." Singapore Economic Review 64, no. 02 (March 2019): 423–40. http://dx.doi.org/10.1142/s0217590817500229.
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We use a monthly dataset to analyze whether Islamic banks have greater market power compared with their conventional counterparts. Using a sample of Indonesian banks, we find that Islamic banks possess greater market power than conventional banks. This condition does not hold, however, when we compare state-owned Islamic and conventional banks. We also find some specific determinants of Islamic banks’ market power: the Ramadan holy month (positive impact), the proportion of profit-and-loss sharing in their financing (negative impact), and the presence of a Sharia board (positive impact). Interestingly, Ramadan benefits not only Islamic banks but also conventional banks. Our findings support prior literature emphasizing the role of religiosity in Islamic banks’ behavior.
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Ahmad Abu Musa, Rasmiyah, and Maysa Munir Malham. "The Impact of the Reserves of Conventional and Islamic Banks Operating in Jordan on the Book Value and Market Value of Shares: A Comparative Analytical Study." مجلة إسرا الدولية للمالية الإسلامية 12, no. 1 (June 15, 2021): 65–89. http://dx.doi.org/10.55188/ijifarabic.v12i1.237.
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This study aimed at identifying the impact of the reserves of Islamic and conventional banks whose shares are listed on the Amman Stock Exchange on the book and market value of these shares for the period (2010-2018). The study included thirteen conventional banks and two Islamic banks. The study found that there is a statistically significant effect of reserves held by Islamic and conventional banks on the market price, an effect of 73.6% for Islamic banks and 16.5% for conventional banks. Also, the study found that a statistically significant effect appeared between the reserves of Islamic banks and their stocks’ book value; this effect did not appear with conventional banks. The study also found that there was no statistically significant effect between the change in the reserves of conventional and Islamic banks and the change in the market price, and there was no statistically significant effect between the change in the reserves and the change in the book value of both conventional and Islamic banks.
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Aracil, Elisa. "Corporate social responsibility of Islamic and conventional banks." International Journal of Emerging Markets 14, no. 4 (October 14, 2019): 582–600. http://dx.doi.org/10.1108/ijoem-12-2017-0533.
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PurposeThe purpose of this paper is to compare the sustainability practices of Islamic and conventional banks, with the aim of evaluating whether their Corporate Social Responsibility (CSR) strategies converge or diverge in response to formal and informal institutions in an emerging country.Design/methodology/approachDrawing on institutional theory, this study contextualizes the competitive scenario through the National Business System (NBS) framework, and showcases the CSR strategies employed by large conventional and Islamic banks in Turkey. CSR patterns are examined from different angles such as motivations, strategy, actions and institutional results.FindingsWithin the same institutional environment, Islamic and non-Islamic banks combine convergent and divergent models to accommodate institutional realities in their CSR policies. Islamic banks exhibit an implicit commitment to CSR that is mostly based on informal institutions, whereas conventional banks use explicit CSR strategies as a means to fill the voids in formal institutions. In addition, philanthropy-oriented CSR prevails in Islamic banks, as opposed to the CSR actions associated with core business that are followed by conventional banks.Social implicationsAn increased focus on formal institutions and explicit CSR actions by Islamic banks may further contribute to social well-being in emerging countries.Originality/valueThis study contributes to the paucity of research, from an institutional perspective, related to CSR practices amongst Islamic and conventional banks in emerging countries.
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Sishadiyati and Chantya Anggi Kirana. "HUBUNGAN MAKROEKONOMI TERHADAP KINERJA KEUANGAN PADA BANK KONVENSIONAL DAN BANK SYARIAH DI JAWA TIMUR." Jurnal Dinamika Ekonomi Pembangunan 3, no. 2 (July 30, 2020): 322–27. http://dx.doi.org/10.33005/jdep.v3i2.111.
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Macroeconomic factors can be said to have a relationship with the financial performance of banks, both conventional banks and Islamic banks. The condition of the banking sector in East Java is very vulnerable to economic shocks that occur. So it requires a very independent and good liquidity management. The existing banking sector is still very dependent on the policies made by the central bank and the government. Then if there is a financial difficulty caused by unfavorable macroeconomic conditions, then the bank's financial performance may also be disrupted. Based on the analysis of data that has been explained that macroeconomic factors such as GRDP, inflation rate, unemployment rate, BI Rate and exchange rate, which have a very large relationship to the performance of conventional banks and Islamic banks in East Java is the BI rate. This shows that the banking sector in East Java must pay special attention to the dynamics of macroeconomic factors that occur. Whereas the financial performance between Islamic banks and conventional banks shows a difference. This is because the management of bank financial performance between Islamic banks and conventional banks has a different policy.
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Monia, Ben Ltaifa. "Stock returns in Islamic and conventional banks." Journal of Islamic Accounting and Business Research 11, no. 3 (January 13, 2020): 629–46. http://dx.doi.org/10.1108/jiabr-03-2016-0033.
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Purpose This study aims to explore empirically the determinants of stock return in a comparative context between Islamic and conventional banks. Design/methodology/approach The analysis of the determinants of stock returns is carried out through a panel data model. This study covers 14 Islamic banks and 30 conventional banks in the MENA countries (Bahrain, Egypt, Kuwait, Malaysia, Qatar, Saudi Arabia and United Arab Emirates) during 10 years, from 2004 to 2014. Findings The empirical results show that the market risk has a positive impact on market profitability of banks except for the small-medium (SM) and big-high (BH) portfolio for the capital asset pricing model and Fama and French models. The risk associated with the size (Small [market capitalization] Minus Big: SMB) has a positive impact on small banks and a negative impact on banks of big sizes. Finally, the risk related to the market value (High [book-to-market ratio] Minus Low: HML) has a positive impact on both small and large banks. Originality/value The answer to the question of explanatory factors for stock market returns allows managers to measure the cost of capital and thus choose the most appropriate form of financing and therefore evaluate the possibility of investing in a particular bank.
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Nurjannah, Afifah Zahroh, and Suryo Budi Santoso. "USE OF E-BANKING IN ISLAMIC BANKS IN INDONESIA." Computer Based Information System Journal 10, no. 2 (September 30, 2022): 7–12. http://dx.doi.org/10.33884/cbis.v10i2.5565.
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This article focuses on the use of computer bases in making bank accounts at Islamic banks, and later on the data will be compared with existing data in conventional banks. This is because in banking, there are two types of banks based on their operational activities, namely Islamic banks and conventional banks. The research in this article is a qualitative study, because it requires various information from Islamic banks and conventional banks. From the information obtained related to Islamic banks and conventional banks, both types of banks have used E-Banking services to make it easier for their customers. However, there are some differences regarding the E-Banking services provided by each bank. So with the research in this article, it is expected to be able to provide information regarding the differences in E-Banking services that exist in Islamic banks and conventional banks. The results of this study are able to provide information related to what e-banking is used by conventional banks and Islamic banks.
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Chen, Naiwei. "C ORRUPTION D IVERSIFICATION AND ASSET QUALITY OF ISL AMIC AND CONVENTIONAL B ANKS : A DYNAMIC PANEL DA TA APPROACH." International Journal of Islamic Business 4, no. 2 (December 31, 2019): 15–32. http://dx.doi.org/10.32890/ijib2022.4.2.2.
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Minimal research to date has examined whether and how corruption and diversification influence the asset quality of Islamic banks from the agency perspective. The study aims to fill this research gap using a sample of 155 banks (28 Islamic banks and 127 conventional banks) in three Asian countries (Indonesia, Malaysia, and Pakistan) from 2006 to 2012. Estimation of the dynamic panel data model reveals that corruption negatively affects the asset quality of Islamic banks whereas conventional banks see no such effect. Corruption also proves to strengthen (weaken) any negative (positive) effect of diversification on the asset quality of Islamic banks, in particular. Furthermore, the modifying effect of corruption is particularly found in more corrupt countries (Indonesia and Pakistan) as opposed to a less corrupt country (Malaysia). Overall, results suggest that banks should engage in diversification moderately because diversification’s negative effect can overpower its positive effect. In addition, Islamic banks and particularly small ones should watch out for the negative effect of corruption because these banks’ asset quality is more influenced by corruption than other banks. Furthermore, it is crucial for policymakers to effectively control corruption to maximize the asset quality of banks for better financial stability of the banking sector. This is especially true for Islamic banks because they are more likely to incur higher agency costs as opposed to conventional banks.
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Chen, Naiwei. "C ORRUPTION D IVERSIFICATION AND ASSET QUALITY OF ISL AMIC AND CONVENTIONAL B ANKS : A DYNAMIC PANEL DA TA APPROACH." International Journal of Islamic Business 4, no. 2 (December 31, 2019): 15–32. http://dx.doi.org/10.32890/ijib2019.4.2.2.
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Minimal research to date has examined whether and how corruption and diversification influence the asset quality of Islamic banks from the agency perspective. The study aims to fill this research gap using a sample of 155 banks (28 Islamic banks and 127 conventional banks) in three Asian countries (Indonesia, Malaysia, and Pakistan) from 2006 to 2012. Estimation of the dynamic panel data model reveals that corruption negatively affects the asset quality of Islamic banks whereas conventional banks see no such effect. Corruption also proves to strengthen (weaken) any negative (positive) effect of diversification on the asset quality of Islamic banks, in particular. Furthermore, the modifying effect of corruption is particularly found in more corrupt countries (Indonesia and Pakistan) as opposed to a less corrupt country (Malaysia). Overall, results suggest that banks should engage in diversification moderately because diversification’s negative effect can overpower its positive effect. In addition, Islamic banks and particularly small ones should watch out for the negative effect of corruption because these banks’ asset quality is more influenced by corruption than other banks. Furthermore, it is crucial for policymakers to effectively control corruption to maximize the asset quality of banks for better financial stability of the banking sector. This is especially true for Islamic banks because they are more likely to incur higher agency costs as opposed to conventional banks.
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Khoso, Dr Aijaz Ali, Dr Muneer Ahmed, and Dr Muhammad Shoaib Khan Pathan. "Customer Satisfaction Standards According to Islamic and Conventional Banking System in Pakistan." International Research Journal of Education and Innovation 3, no. 2 (June 12, 2022): 185–94. http://dx.doi.org/10.53575/irjei.v3.02(22)20.185-194.
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This study analyzed consumer loyalty with Islamic banks and ordinary banks in Pakistan. The historical backdrop of regular banks in Pakistan is superior to that of Islamic banks. The improvement of an Islamic financial framework in Pakistan is at an untimely stage. In Pakistan, not many banks offer clean Islamic financial administrations to their clients. This concentrate likewise analyzes consumer loyalty with the administrations of traditional banks as well as Islamic banks. Our objective region is the Pakistani financial area, and the information comes from interviews with five Islamic banks and five ordinary banks in Pakistan. The aftereffect of this exploration showed that the clients of the two banks were from Islamic banks or traditional banks were happy with the offices given by the banks, notwithstanding, the clients of regular banks were happier with Islamic banks. Hypothetically, current investigations supplement the writing on the above viewpoints and connection them to consumer loyalty. Simultaneously, it causes to notice the factors that are fundamental for the advancement of Pakistan's Islamic financial framework. The discoveries likewise give important data and direction to Islamic banks to plan creative item advancement procedures and publicizing approaches to hold existing clients and draw in possible clients. This study extends the extent of the accessible writing on Islamic banking; However, it doesn't address the situation of the ordinary financial area.
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Et.al, NunungAiniRahmah. "Islamic and Conventional Banks Stability during Global Financial Crisis: Evidence from Indonesia." Turkish Journal of Computer and Mathematics Education (TURCOMAT) 12, no. 3 (April 10, 2021): 2833–40. http://dx.doi.org/10.17762/turcomat.v12i3.1314.
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This study observes the stability of Islamic and conventional banks in Indonesia mainly during and post global financial crisisand their impact to the general financial stability.Bank stability measured by Z-scores, could be influenced by bank specifics, market concentration, and macroeconomic indicators.Pooled GLS regression analysis wereemployed to examine the Islamic and conventional banks stability. The sample size is 50 banks in Indonesia, consisting of 9 Islamic banks and 41 conventional banks between 2008 and 2017. The finding showed that the stability of the conventional bankslower than the Islamic bank. However,large Islamic banks are significantly less stable than the large conventional banks. Meanwhile, the small Islamic banks are significantly more stable than the small conventional banks. The finding of the study is expected to enhance the understanding of banks stability during and post global financial crisis in general, and within the context of Indonesia in particular.
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Akhmadi, Akhmadi. "Analisis Komperatif Kinerja Keuangan Bank Syariah dan Bank Konvensional Antara BRI dan BNI dengan Pendekatan Camel." Jurnal Ilmiah Universitas Batanghari Jambi 21, no. 2 (July 4, 2021): 761. http://dx.doi.org/10.33087/jiubj.v21i2.1538.
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Bank is an important financial institution so that its performance needs to be maintained in order to work properly and optimally. The purpose of this study is to analyze the comparison of the financial performance of Islamic banks and conventional banks in Indonesia. This research is a comparative quantitative research using a comparison design of two averages from two independent populations. The samples in this study were 2 Islamic banks (Bank Negara Indonesia Syariah and Bank Rakyat Indonesia Syariah) and 2 conventional banks (Bank Negara Indonesia and Bank Rakyat Indonesia). The bank's financial performance assessment method used in this study is CAMEL with financial ratios namely CAR, NPL, NIM, ROA, BOPO, and LDR. Data were analyzed using the mean difference test of two unpaired groups (independent sample t-test). The results of this study indicate that there are significant differences in the ratio of NPL, ROA, BOPO, LDR between Islamic banks and conventional banks. The results of the analysis show that the financial performance of Islamic banks is better based on the ratio of NPL, NIM, BOPO, LDR. While the financial performance of conventional banks is better based on the ratio of CAR, ROA.
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Rahmawati, Azizah Kartika, S. R. Kartika Sari, and Herry Hermawan. "Analisis Perbandingan Efisiensi Bank Umum Konvensional dan Bank Umum Syariah di Indonesia." Akuntabilitas 12, no. 2 (December 4, 2019): 191–200. http://dx.doi.org/10.15408/akt.v12i2.12600.
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The purpose of this study was to determine the level of efficiency between conventional commercial banks and Islamic commercial banks. The sampling technique used in this study was purposive sampling by taking state-owned banks and Islamic commercial banks with the highest assets. Efficiency measurement in this study uses the Data Envelopment Analysis (DEA) method. The results of this study indicate that there are differences in efficiency between conventional commercial banks and Islamic commercial banks. Overall, each bank has an efficiency level of 93.67% (conventional commercial banks) and 99.99% (Islamic commercial banks). These results indicate that Islamic commercial banks are more efficient than conventional commercial banks.
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Ananda, Yussi, Hasdi Aimon, and Dewi Zaini Putri. "PENGARUH KEKUATAN PASAR TERHADAP KECUKUPAN MODAL PADA BANK KONVENSIONAL DAN SYARIAH DI INDONESIA." Jurnal Kajian Ekonomi dan Pembangunan 1, no. 1 (March 15, 2019): 111. http://dx.doi.org/10.24036/jkep.v1i1.5355.
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This study aims to find out how the Influence of Market Power on Capital Adequacy in Conventional and Islamic Banks in Indonesia in the long and short term. The data used are secondary data in the form of time series from 2006: Q1 to 2016: Q4, with documentation data collection techniques and library studies obtained from relevant institutions and agencies. The variables used are Market Power, Deposits, Capital, Inflation and Economic Growth. The research methods used are: (1) Error Correction Model (ECM) Analysis, (2) Classical Assumption Test. The results of the study show that (1) Short-term paths of Conventional Bank Market Power are higher than Islamic banks. This means that in the short term the Konvensionsal Bank dominates the banking market in Indonesia. While in the long run Market Power in Islamic Banks is higher than Conventional Banks. So Islamic banks in the long run dominate the banking market in Indonesia. (2) In the short term and long term deposits at Conventional Banks are higher compared to Islamic Banks. So conventional banks in the short and long term can collect more banking funds in Indonesia. (3) In the short and long term capital in Islamic banks is higher than conventional banks. So Islamic banks in the short and long term dominate banking capital in Indonesia. (4) In the short and long term, inflation in conventional banks is higher compared to Islamic banks. So it can be said that conventional banks in the short and long term are influenced by inflationary shocks in Indonesia. (5) In the short-term and long-term economic growth in Islamic banks is higher than conventional banks. So it can be said that Islamic banks in the short and long term are influenced by the high and low level of Indonesia's economic growth.Keywords: Market Power, Capital Adequacy, Conventional and IslamicBanks, and Error Correction Model (ECM).
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Akhmadi, Akhmadi Akhmadi, Ernis Chaerunisa, and Shinta Zahra Chaerunisa. "Financial Performance Comparison (Empiric Study on Conventional Commercial Banks and Sharia Commercial Banks 2012-2018)." AFEBI Management and Business Review 6, no. 1 (August 19, 2021): 59. http://dx.doi.org/10.47312/ambr.v6i1.439.
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<p>This study aims to examine more the comparison of financial performance between Islamic Commercial Banks and Conventional Commercial Banks. The population in this study includes conventional banking companies and Islamic banking which are listed on the Indonesia Stock Exchange and supervised by the Financial Services Authority (OJK) for the period 2012-2018 as many as 114 companies. The observational data used were 56 data from 14 general and Islamic banks which were sampled in this study. The method of analysis used the normality test, the independent sample t-test, and the Mann-Whitney test. The results showed that tThere is no significant difference in the Capital Adequency Ratio between Conventional Commercial Banks and Islamic Commercial Banks, There is a significant difference in non-performing loans / financing (NPL / NPF) between Conventional Commercial Banks and Islamic Commercial Banks, there is a significant difference in return on assets (ROA) between Commercial Banks Conventional with Islamic Commercial Banks, there is a significant difference in operating expenses to operating revenue (BOPO) between Conventional Commercial Banks and Islamic Commercial Banks, there is a significant difference in loan / financing to deposit ratio between Conventional Commercial Banks and Shari'ah Commercial Banks.</p>
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Musa, Hussam, Viacheslav Natorin, Zdenka Musova, and Pavol Durana. "Comparison of the efficiency measurement of the conventional and Islamic banks." Oeconomia Copernicana 11, no. 1 (March 31, 2020): 29–58. http://dx.doi.org/10.24136/oc.2020.002.
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Research background: Islamic banks appeared on the world scene as active players over two decades ago. Many of the principles upon which Islamic banking is based have been commonly accepted all over the world. Financial institutions driven by Islamic principles acquire new clientele without excessive marketing, due to preservation of conservative values. Contrary to the conventional investment banks, their value is based on real money, and not on virtual activities from swap and derivative assets. Competition between conventional (or traditional) and Islamic banks is increasing every day, moreover, Islamic financial institutions are more resistant to the crisis. Our study contains analysis and comparison of economic efficiency of the conventional and Islamic banks. Besides the fact that traditional and Islamic banks apply inputs differently, the reason of better efficiency of Islamic banks may be connected with different approach to the risk management and control of the banking operations by the Sharia commission.
Purpose of the article: The main aim of the article is to compare the economic efficiency of the conventional and Islamic banks in Europe.
Methods: To achieve the aim of the paper, firstly the selected financial indicators of traditional and Islamic banks in Europe were compared. The second, the analysis of the economic efficiency of the selected 1460 conventional and Islamic financial institutions using DEA methods was conducted.
Findings & Value added: Research results indicated methodological differences in the economic efficiency measuring in the Islamic banks. At the same time, the higher economic efficiency of Islamic banks was confirmed. The results are motivating for the follow-up investigation into the causes of higher efficiency of Islamic banks compared to traditional banks.
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Tabash, Mosab I., Ali T. Yahya, and Asif Akhtar. "Financial Performance Comparison of Islamic and conventional banks in the United Arab Emirates (UAE)." International Conference on Advances in Business, Management and Law (ICABML) 2017 1, no. 1 (December 24, 2017): 477–94. http://dx.doi.org/10.30585/icabml-cp.v1i1.39.
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This paper examines the financial performance of Islamic and commercial banks in the United Arab Emirates (UAE). The paper gives an empirical insights and comparisons between the performance of Islamic and conventional banking sectors. The sample of the study consists of 5 fully-fledged Islamic banks and 14 conventional banks working in the UAE under the period 2011-2014. The study uses descriptive analysis, correlation, independent sample t test and multiple regression analysis to assess the performance and to compare between both types of banks. The Return on Assets (ROA) is used as proxy for profitability for both types of banks while bank size (log A), liquidity, capital adequacy, financial risk and operating efficiency as proxies for financial performance for both types of banks. The results showed that there is no significant difference between Islamic banks and conventional banks in terms of profitability (ROA) while there is a significant difference between Islamic and conventional banks in terms of liquidity, operation efficiency, capital adequacy, and financial risk. Further, the results indicated that the Islamic banks have higher operating efficiency, bank size and more liquidity than their counterparts of UAE. However, conventional banks are found to have better capital adequacy ratio than Islamic banks. In terms of financial risk, Islamic banks are found to have higher five times than conventional banks which may reflect challenges in the area of risk management in Islamic banks.
Keywords: Financial performance, Islamic banks, Conventional banks, ROA, UAE.
JEL Classification: A10, E60, G21
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Ghenimi, Ameni, Hasna Chaibi, and Mohamed Ali Brahim Omri. "Liquidity risk determinants: Islamic vs conventional banks." International Journal of Law and Management 63, no. 1 (November 18, 2020): 65–95. http://dx.doi.org/10.1108/ijlma-03-2018-0060.
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Purpose This paper aims to identify and analyze the similarities and differences of the liquidity risk determinants within conventional and Islamic banks. Design/methodology/approach This study uses a dynamic panel data approach to examine the relationship between liquidity risk and a set of bank-specific and macroeconomic factors during 2005–2015, by selecting 27 Islamic banks and 49 conventional ones operating in the MENA region. More specifically, the dynamic two-step generalized method of moment estimator technique introduced by Arellano and Bond (1991) is applied. Findings The results suggest that the set of bank-specific variables influences the liquidity risk of both banking systems, while macroeconomic factors determine the liquidity risk of conventional banks. Islamic banks are not affected by macroeconomic determinants. Practical implications The research facilitates to the academicians, practitioners and bankers to have an alluded picture about liquidity risk determinants and their management. The findings can be used by bankers’ policy decision-makers to improve and enhance their consideration for liquidity risk management in both banking systems. Indeed, the study makes them aware to manage liquidity risk differently between conventional and Islamic banks, as the results reveal different liquidity risk determinants. Originality/value Compared to the abundant studies on the determinants of credit risk, researchers have not sufficiently addressed the factors influencing liquidity risk. Moreover, none of these few research studies has discussed and compared liquidity risk determinants within both banking systems operating in the Middle East and North Africa (MENA) region. This leads us to identify the similarities and differences between conventional and Islamic banks in the MENA region in respect of systematic and unsystematic determinants of the liquidity risk. The value is attributed to the increasing differentiation between Islamic and conventional banks. Islamic banks are characterized with a different liquidity structure distinguishing them from their conventional counterparts.
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Latifah, Luluk, and Ahmad Zahro. "AMANAH'S PHILOSOPHICAL VALUE IN SHARIA BANKING." Advanced International Journal of Banking, Accounting and Finance 2, no. 2 (March 13, 2020): 21–30. http://dx.doi.org/10.35631/aijbaf.22003.
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The philosophical value of the security is a very great value, which comes from Allah SWT, which is given to his creatures, and humans as the bearer of the highest mandatory value to carry out, maintain and implement it, with security between humans there will be a belief and this trust will ultimately cultivate an inner calm or soul. To find out and measure philosophical values of the trust in both conventional and Islamic banking, then in this study will present the results of the study with respondents divided into two groups, the first group is those with a bachelor's degree in general and the second group is those who have S2 degrees and doctoral candidates for Islamic Economics. Quantitative research methods, with frequency distribution and cross-tabulation of selected variables with data analysis using SPSS. Based on the results of the study, the values of security from the highest to the lowest are: In the first group of respondents, the values of security from the highest to the lowest are: (1) Value of Maintaining Trustworthiness, Islamic Banks get a value of 4.42 and a conventional bank of 3.67. (2) The value of responsible Islamic banks is 4.00 and conventional banks are 3.08. (3) The value of maintaining bank secrets, Islamic Banks is 3.92 and conventional banks are 3.83. (4) The trust value of Islamic Banks is 3.58 and conventional banks are 2.42. (5) Honest Value, carrying out the assignment of 2.17 for Conventional Banks and (6) Trust value in delivering messages 3.33 for Conventional Banks at Islamic Banks has the same value of 3.42. In the second group of respondents (1) The value of safeguards of customer secrets, Islamic banks get the highest value of 4.70. whereas Conventional Bank 4.0. (2) The value of guarding the customer's trust, Islamic banks get a value of 4.50 and Conventional Bank 3.60. (3) Value of liability, Islamic banks 4.40 and Conventional Banks 3.90. (4) Value can be trusted, Islamic banks get a value of 4.20, and Conventional Banks 3.40. (5) The value of honesty and ability to perform tasks, Islamic banks get a value of 4.10, while in conventional banks is the lowest value of 1.70.
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Begum, Sameena. "A Comparative Study of Customer Satisfaction of Islamic Banks and Conventional Banks in Oman." SIJ Transactions on Industrial, Financial & Business Management 02, no. 03 (June 9, 2014): 05–09. http://dx.doi.org/10.9756/sijifbm/v2i3/0204480101.
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Siddiq, Dr Abbokar, Ebrahim Al Gamal, and Osamah AL-Maamari. "Credit Risk Minimizing: Analysis study of Islamic and conventional banks in Yemen." Journal of Advanced Research in Economics and Administrative Sciences 3, no. 4 (January 6, 2023): 1–8. http://dx.doi.org/10.47631/jareas.v3i4.553.
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Purpose: The study aims to compare the credit risk minimization between Islamic and conventional banks in Yemen. Approach/Methodology/Design: This paper is limited to a homogeneous sample that includes the Islamic and conventional banks' coverage as they represent the most significant part of the Yemeni banking sector. Using a descriptive-analytical method, data has been collected by a questionnaire sent by post to each Islamic and conventional bank separately located in Yemen's capital city. Findings: The study concludes that credit risk is the most critical risk facing banks, and there is a significant difference in credit risk minimizing between Islamic. Originality/value: The result showed that the banks' most critical risks are credit risks, and there is a significant difference in credit risk minimisation between Islamic and conventional banks. Also, conventional banks possessed a credit risk minimizing system better than Islamic banks. Several recommendations identified where the Yemeni banks, whether Islamic or conventional, should use advanced methods to measure and analyze credit risks.
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Khan, Imran, Mehreen Khan, and Muhammad Tahir. "Performance comparison of Islamic and conventional banks: empirical evidence from Pakistan." International Journal of Islamic and Middle Eastern Finance and Management 10, no. 3 (August 21, 2017): 419–33. http://dx.doi.org/10.1108/imefm-05-2016-0077.
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Purpose This study aims to investigate the performance differences of Islamic and conventional banks in Pakistan by using financial ratios. Design/methodology/approach This study analyzed 5 Islamic and 19 conventional banks for the periods of 2007-2014. Two types of analyses were performed – sample t-test and logistic regression. Analysis was also performed on sub-sample considering crisis effects. Findings It was found that Islamic banks are relatively better in profitability, efficiency, risk and liquidity management, while conventional banks are superior in asset quality. Higher efficiency of Islamic banks contradicts with previous studies conducted in Pakistan. Probable reasons for this include phenomenal expansion of Islamic banking industry and its broad appeal to customers in Pakistan. Risk management practices of Islamic banks are superior to conventional banks, as Shariah rules restrict pure speculation in monetary terms. Better asset quality of conventional banks is attributed to their recognition and product diversity. During the crisis, Islamic banks were found less profitable than their counterparts. Research limitations/implications This study suggests that high operational efficiency of Islamic banks should be converted into technical efficiency by improving human resource, introducing innovative market-oriented products and prudent resource allocations. As operational efficiency does not promise returns in long term, to sustain ongoing phenomenal growth of Islamic banking, management needs to gain customer trust. Originality/value This is an original research that compares performance differences across Islamic and conventional banks by using financial ratios.