The purpose of this empirical study is to analyze and compare the performance of Islamic and conventional banking in Pakistan and to find out which of the banking stream is performing better than other. For this study, sample of 22 conventional banks and 5 Islamic banks were selected. For in-depth understanding and sound comparison, key performance indicators were divided into external and internal bank factors. The external factor analysis includes studying the customer behavior and perception about both Islamic and conventional banking. Internal factor analysis includes measure of differences in performance of Islamic and conventional banks in terms of profitability, liquidity, credit risk and solvency. Nine financial ratios were used to gauge profitability, liquidity and credit risk; and a model known as “Bank-o-meter” is used to gauge solvency. Findings suggest in terms of profitability and liquidity conventional banking leads, while in credit risk management and solvency maintenance Islamic banking dominates. Motivating factors for customers of Islamic banking are the location and Shari’a compliance, while in case of conventional banking it is wide range of products and services.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1973569_code454519.pdf?abstractid=1959950&type=2

Comparative Performance Study of Conventional and Islamic Banking in Pakistan

The purpose of this empirical study is to analyze and compare the performance of Islamic and conventional banking in Egypt and to find out which of the banking streams is performing better than the other. To make appropriate comparative analysis, three Islamic banks (Faisal Islamic Bank, ElBaraka Misr, and National Bank for Development) and six conventional banks (National Bank of Egypt, Banque Misr, Bank of Alexandria, National Societe Generale Bank, Arab African International Bank, Commercial International Bank) were used during the period from 2008 to 2010. Financial ratios were estimated from annual reports and financial statements. Seven financial ratios were used to gauge profitability, liquidity and credit risk; and a model known as “Bank-o-meter” was used to gauge solvency. Findings indicate the superiority of conventional banks over Islamic ones in profitability, liquidity, credit risk management as well as solvency.

/pdf/comparative-performance-study-of-conventional-and-islamic-4t5p6lmfmv.pdf

Comparative Performance Study of Conventional and Islamic Banking in Egypt

The present paper measured the efficiency of Islamic banks during economic troubles of 2006-2009 to address the question if Islamic banks were efficient and stable. This paper addresses this question by measuring efficiency through employing the on-parametric technique, Data Envelopment Analysis (DEA) and t test was used to test the hypotheses. This study extends research, which suggests that large Islamic banks showed an increase in efficiency during 2006 to 2008 and decline during 2009. However, small to medium Islamic bank sample started at a lower level of efficiency. In addition, the results showed that the efficiency of Islamic banks operates in Middle Eastern and non-Middle Eastern Counties have increased during an economic crisis.

/pdf/efficiency-in-islamic-banking-during-a-financial-crisis-an-134jborig1.pdf

Efficiency in Islamic Banking during a Financial Crisis-an Empirical Analysis of Forty-Seven Banks

Shari’ah is the foundation of Islamic banks. Although all the Islamic banks required complying with the Shari’ah requirements fully, the level of compliance differs among the Islamic banks. At the same time, Islamic banks have been performing well, but all do not demonstrate similar financial performance. This paper aims to explore whether Shari’ah compliance efficiency makes any difference in financial performance of Islami Bank Bangladesh Limited (IBBL).,This study used IBBL as a case. For exploring the issue of study, this paper applied an e-mail interview approach and interviewed 24 interviewees including financial analysts, IBBL clients and executives of regulatory bodies, the IBBL and other Islamic- and interest-based traditional banks. Interview opinions are then analyzed and interpreted for a deeper understanding of the topic.,The study observed that some other factors influence the financial performance of IBBL, but Shari’ah compliance is the dominant instinct of acquiring the leading position. Superior Shari’ah compliance creates internal strengths and external opportunities that facilitate IBBL in achieving higher financial performance. Most interviewees argued that Shari’ah is the only disposition that makes IBBL unique. Moreover, the bank that considerably follows Shari’ah gets better financial outcomes.,The study used a qualitative method using interview responses only for evaluating the relationship between Shari’ah compliance and financial performance. Further study may be conducted based on a quantitative approach.,This paper expects to uphold the significance of Shari’ah in improving the financial performance of IBBL and simultaneously motivating the parties associated with the Islamic banks in enhancing the level of Shari’ah compliance. Moreover, this study provides new insights into the importance Islamic banks and their performance in relation to the choice of customers.,This study explores the significance of Shari’ah compliance in creating avenues for greater financial performance and develops a model showing the ways how Shari’ah compliance leads Islamic banks to achieve higher financial positions.

Whether Shari’ah compliance efficiency is a matter for the financial performance: The case of Islami Bank Bangladesh Limited

The purpose of this quantitative nonexperimental study, grounded in conventional economic efficiency theory, was to compare the change in efficiency of different banks, specifically Islamic and Western, that occurred during the 2007 to 2009 economic downturn, using 2006 as baseline. Relative assets size and bank classification were used to compare the change in banks’ efficiency. The research questions addressed whether efficiency changes during the financial crisis of 2007-2009 were different between Western and Islamic banks. Data for small and large Western commercial banks were collected from the Federal Deposit Insurance Corporation (FDIC) website; for Islamic banks, data were collected from the Islamic Banks and Financial Institutions Information (IBIS) website. Data envelopment analysis (DEA) was used to calculate the efficiency of these banks, and independent samples t test was used to test the hypotheses. The results indicated that the impact of the financial crisis was different depending upon the bank type. The financial crisis had the greatest impact on the efficiency of small commercial Western banks compared to Islamic banks and large Western banks.

Comparing the Change in Efficiency of the Western and Islamic Banking Systems

The commercial banking system dominates the financial sector with limited role of non-bank financial institutions and the capital market. The Banking sector alone accounts for a substantial share of assets of the financial system. Commercial banks contribute significantly in the economic development through the development of major contributory economic indicators directly or indirectly. Commercial banks in Bangladesh operate under branding of interest-based conventional banks and interest-free Islamic banks (based on Islamic sariah).The study emphasis on the financial performance analysis of both stream of banks to measure superiority. The study indicates that financial performance (business developments, profitability, liquidity and solvency, commitment to economy and community, efficiency and productivity) of both streams of banks is notable. Study result based on commitment to economy & community, productivity and efficiency signifies that interest-based conventional banks are doing better performance than interest-free Islamic banks. But performance of interest-free Islamic banks in business development, profitability, liquidity and solvency is superior to that of interest-based conventional banks. That is comparatively Islamic banks are superior in financial performance to that of interest-based conventional banks.

/pdf/superiority-of-conventional-banks-islamic-banks-of-40kif8zb0y.pdf

Superiority of Conventional Banks & Islamic Banks of Bangladesh: A Comparative Study

Cash-rich firms and carbon emissions

Abstract This study is the first to examine the impact of FinTech firms on bank financial stability. Using a sample of 26 banks from an emerging market (Malaysia), over the period 2003–2018, we find that the development of FinTech firms over time increases bank financial stability. We uncover further evidence that FinTech firms’ impact on bank financial stability holds when we conduct sub-sample analyses by bank size, bank type (Islamic vis-à-vis conventional), and level of corporate governance. The results are robust to alternative model specifications, measures of financial stability, and FinTech. 

/pdf/the-impact-of-fintech-firms-on-bank-financial-stability-6jdtqi1k.pdf

Md. Safiullah

Papers

Superiority of Conventional Banks & Islamic Banks of Bangladesh: A Comparative Study

Cash-rich firms and carbon emissions

The impact of FinTech firms on bank financial stability

Gender diversity on corporate boards, firm performance, and risk-taking: New evidence from Spain

Do all institutional investors care about corporate carbon emissions?