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Does the banking system affect banks’ performance? Islamic vs. conventional banking

Blasig, S.B. (2017) Does the banking system affect banks’ performance? Islamic vs. conventional banking.

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Abstract:In recent years, Islamic banking experienced an upturn and gained importance on the world’s financial markets. However, evidence in the literature on differences in performance to conventional banks is often diverging or inconclusive. In this thesis, both bank types are compared in terms of profitability, efficiency, liquidity, solvency and credit risk based on financial ratios. Investigated are banks from Bangladesh, Bahrain, Jordan, Kuwait, Malaysia, Oman, Qatar, Saudi Arabia and the United Arab Emirates between 2008 and 2015. Two sample t-tests reveal that conventional banks outperform Islamic banks in most dimensions. Although Islamic banks are more liquid and perform better in one efficiency ratio, conventional banks prevail with respect to profitability, solvency and credit risk. A logistic regression analysis shows that banks can be significantly categorized into being conventional or Islamic based on efficiency, liquidity and credit risk ratios. Finally, ordinary least squares regressions show that the financial performance as such is determined largely similar for both Islamic and conventional banks. Some of the findings contradict studies that were carried out before the financial crisis and support the results of more recent studies. The results further indicate that there are differences in performance across countries, especially with respect to Islamic banks
Item Type:Essay (Master)
Clients:
Unknown organization, Deutschland
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics, 85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/73002
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