scholarly journals Conducting Business with God: Is God Blessing Islamic Banks with Better Financial Performance than Conventional Banks?

2019 ◽  
Vol 6 (2) ◽  
pp. 40
Author(s):  
Musaed S. Alali
Keyword(s):  
Financial Performance ◽  
Financial Analysis ◽  
Stock Exchange ◽  
The Other ◽  
Islamic Banks ◽  
Return On Assets ◽  
Return On Equity ◽  
Significant Difference ◽  
Kuwait Stock Exchange ◽  
Conventional Banks

This study aims to compare the financial performance between Islamic and conventional banks listed at Kuwait stock exchange over the period 2011-2018 using the modified DuPont model of financial analysis which is based on the analysis of return on equity (ROE). Unlike previous studies where researchers compared the performance on a bank-to-bank basis, this study examines the aggregate ratios of Islamic banks and compare it to aggregate ratios of conventional banks. The study also adds volatility into the model since consistency in returns indicated a more stable sector.  Results obtained from this study showed that conventional banks in Kuwait had a better mean performance during the study period in terms of both return on assets (ROA) and return in equity (ROE), Islamic banks also showed a higher deviation in these two ratios resulting in a lower Sharpe ratio. While the results showed no statistically significant mean difference between Islamic and conventional banks in terms of return on assets (ROA), the results also showed a statistically significant difference in mean return on equity (ROE) between the two sub-sectors.  On the other hand, Islamic banks showed an impressive improvement in their ratios during the last three years of the study period which impose a real threat to conventional banks in the future.

scholarly journals Financial Performance Comparison (Empiric Study on Conventional Commercial Banks and Sharia Commercial Banks 2012-2018)

2021 ◽  
Vol 6 (1) ◽  
pp. 59
Author(s):  
Akhmadi Akhmadi Akhmadi ◽  
Ernis Chaerunisa ◽  
Shinta Zahra Chaerunisa
Keyword(s):  
Financial Performance ◽  
Financial Services ◽  
Commercial Banks ◽  
Stock Exchange ◽  
Performance Comparison ◽  
Islamic Banks ◽  
Return On Assets ◽  
Normality Test ◽  
Significant Difference ◽  
Loan Financing

<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>

scholarly journals Relationship between Capital Structure and Profitability: Dual Banking Perspective

2020 ◽  
pp. 181-191
Author(s):  
Mudassir Zaman ◽  
Shakir Ullah ◽  
Arshad Ali
Keyword(s):  
Capital Structure ◽  
Stock Exchange ◽  
Banking System ◽  
Financial Statements ◽  
The Other ◽  
Islamic Finance ◽  
Islamic Banks ◽  
Return On Equity ◽  
Conventional Banks ◽  
The Relationship

This study looks into the relationship between the capital structure and profitability of Islamic and conventional banks, listed on the Karachi Stock Exchange extracting data for 250 observations between 2006 and 2016 from their financial statements. The paper uses regression analysis to check the proposed relationship. We found a strong correlation between Debt-to-Equity (D/E) ratio and Return on Equity (ROA) in conventional banks while no significant relationship existed in Islamic banks. The findings can be explained in terms of the different deposit mechanisms employed by the two systems i.e. the conventional banking system considers all deposits as liabilities of the banks while on the other hand Islamic banks only write the current accounts as a debt. The Modaraba-based deposit accounts of Islamic banks are considered as equity. This paper contributes theoretically to the current body of Islamic finance literature in Pakistan. On the practical side, the study suggests that Islamic banks can increase their savings deposits as they pose no risk and have equity-like features.

scholarly journals Financial Performance of Banks in Lebanon: Conventional vs Islamic

2019 ◽  
Vol 12 (2) ◽  
pp. 40 ◽  
Author(s):  
Boutheina HASHEM ◽  
Hiyam SUJUD
Keyword(s):  
Regression Analysis ◽  
Financial Performance ◽  
Banking Industry ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Return On Assets ◽  
Return On Equity ◽  
The Difference ◽  
Conventional Banks

This study compares the performance of Islamic and conventional banking in Lebanon in terms of Return on Assets and Return on Equity over the period 2012-2016. Moreover, it examines whether the internal characteristics of the bank may explain the difference in profitability between two types of banking transactions. In addition, the results of the study are analyzed using a regression analysis applied to a sample of both Islamic and conventional banks to investigate the effects of these variables on bank performance. Furthermore, results show that Islamic banks in Lebanon have better asset adequacy compared to conventional banks. However, conventional banks are better in liquidity and are on an average more profitable than Islamic ones. It is worthy to indicate that the Islamic banking industry in Lebanon is still in its infancy and only very few of the banks were active in this sector.

scholarly journals ANALISIS PERBANDINGAN KINERJA KEUANGAN BANK SYARIAH DAN BANK KONVENSIONAL DI INDONESIA

2017 ◽  
Vol 9 (1) ◽  
pp. 129
Author(s):  
Dwi Umardani ◽  
Abraham Muchlish
Keyword(s):  
Financial Performance ◽  
Stock Exchange ◽  
Financial Statements ◽  
Annual Reports ◽  
Islamic Banks ◽  
Banking Supervision ◽  
Font Size ◽  
Financial Ratio ◽  
Significant Difference ◽  
Conventional Banks

<p><span style="font-size: 10px;">ABSTRACT</span></p><p>This study aims to compare the financial performance of Islamic banks with conventional banks in Indonesia using financial ratios: CAR, NPL / NPF, ROA, ROE, LDR / FDR, REO / BOPO.</p><p>The data used are the financial statements published by Bank Indonesia (BI), the annual reports released by banking companies listed in Indonesia Stock Exchange (IDX), the annual reports issued by companies of Islamic banking that are not listed in Indonesia Stock Exchange (IDX), and the Indonesian banking supervision reports contained in Bank Indonesia (BI) for the years 2005-2012.</p><p>The analytical method used to compare the financial performance of Islamic banks with conventional banks is statistical test independent t-test.</p><p>The fact shows that for each financial ratio of Islamic banks and conventional banks in Indonesia: CAR, ROA, ROE, LDR / FDR, and BOPO there are significant differences, while NPL / NPF there is not significant difference.</p><p>Keywords: Financial performance, Islamic banks, conventional banks</p>

scholarly journals Staff Efficiency Effects on Financial Performance: A Case Study on Kuwaiti Banks

2020 ◽  
pp. 59-63
Author(s):  
Musaed S. AlAli
Keyword(s):  
Financial Performance ◽  
Stock Exchange ◽  
Return On Assets ◽  
Return On Equity ◽  
Independent Variables ◽  
Kuwait Stock Exchange ◽  
Dependent Variables ◽  
National Bank ◽  
Efficiency Effects

An efficient employee is considered as a valuable asset in any organization, but measuring employee efficiency is not an easy task. This study aims to measure and compare staff efficiency in Kuwaiti banks using the financial performance of the bank as an efficiency proxy. Return on assets (ROA) and return on equity (ROE) are set as dependent variables, and total assets per employee, cost per employee, revenue per employee, number of staff per branch, and total employees’ cost to total revenues are set as independent variables. Using panel OLS regression on the data of 10 Kuwaiti banks that are listed at Kuwait stock exchange (KSE) over the period 2010-2018, results showed that total assets per employee, cost per employee, revenue per employee all had a significant direct relationship with both ROA and ROE and only total employees’ cost to total revenues showed a significant inverse relationship with the financial performance of the banks. The number of staff per branch was the only variable that had no relation with both ROA and ROE. The model showed that the National bank of Kuwait had the most efficient employees’ when it comes to ROA, while Ahli United bank had the most efficient employees’ when ROE was used to measure staff efficiency. In both cases, ROA and ROE, Warba bank had the least efficient staff among all banks under study.

scholarly journals Liquidity Management and Banks Financial Performance in Kuwait

2020 ◽  
Vol 4 (3) ◽  
pp. 102-108
Author(s):  
Musaed Sulaiman AlAli
Keyword(s):  
Financial Performance ◽  
Direct Relationship ◽  
Stock Exchange ◽  
Financial Indicators ◽  
Return On Assets ◽  
Return On Equity ◽  
Financial Ratio ◽  
Kuwait Stock Exchange ◽  
The Impact ◽  
The Relationship

Bank liquidity plays an important role in determining the bank’s financial performance. This study examines the impact of liquidity on the financial performance of ten Kuwaiti banks, whose shares are listed on the Kuwait Stock Exchange in the period 2010-2018. The article is based on the analysis of return on assets (ROA) and return on equity (ROE) as indicators of the bank’s financial efficiency in comparison with the five liquidity ratios. The results of the study showed a statistically significant direct relationship between ROA and the ratio of loans to total assets, the ratio of loans and deposits and the ratio of the financing deficit to total assets. According to the results of the calculations, a statistically significant inverse relationship between the ROA of liquid assets and the total assets and the ratio of liquid assets and deposits. The determination of return on equity (ROE) showed their statistically significant feedback only on liquid assets and deposits, while a significant direct relationship with the ratio of loans to total assets, the ratio of loans to deposits and the deficit of funding to the total assets. The results of this study provide an explanation of the contradictory results presented in the literature on the impact of liquidity on the financial results of banks. They found that the direction of the relationship depended on which financial ratio was used to explain the relationship (in this study, two ratios showed feedback, while the other three showed a direct ratio). The lack of a universal liquidity ratio will eventually lead to conflicting results. Keywords: liquidity, financial indicators, financial results, Kuwait banks, Kuwait Stock Exchange.

The performance of Islamic banking among the commercial banks in Malaysia

2008 ◽  
Vol 5 (1) ◽  
pp. 59
Author(s):  
Samsuwatd Zuha Mohd Abbas ◽  
Norli Ali ◽  
Aminah Mohd Abbas
Keyword(s):  
Commercial Banks ◽  
Positive Impact ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Return On Assets ◽  
Return On Equity ◽  
Accounting Performance ◽  
Significant Difference ◽  
The Mean

This paper examines the accounting performance of the Islamic banking among (??) commercial banks in Malaysia. A total of 18 commercial banks which include 4 Islamic banks are selected as samples covering the period of 2000 - 2006. Accounting performance is measured by the return on assets (ROA) and return on equity (ROE). The objective of the study is (1) to determine whether Islamic banking performance is at par with the conventional banking and (2) to investigate whether the type (Islamic or conventional bank) and age of bank influence the performance. Result of the independence t-test of the study shows that there is no significant difference in the performance of the Islamic and the conventional banking in Malaysia although the mean score for conventional banking is higher. The regression results show that the age of banks has a positive impact on the bank performance where as none of the types of banks influence performance.

ANALISIS KINERJA KEUANGAN PERUSAHAAN PROPERTI YANG TERDAFTAR DI BEI SEBELUM DAN SESUDAH KEBIJAKAN LOAN TO VALUE

2019 ◽  
Vol 4 (1) ◽  
pp. 79-90
Author(s):  
Ghaniy Ridha Prima ◽  
Hermanto Siregar ◽  
Ferry Syarifuddin
Keyword(s):  
Real Estate ◽  
Financial Performance ◽  
Stock Exchange ◽  
Sample Selection ◽  
Test Analysis ◽  
Asset Return ◽  
Return On Equity ◽  
Analysis Technique ◽  
Significant Difference ◽  
Before And After

The purpose of this study is to provide empirical evidence of the effects of the Loan to Value (LTV) policy on the financial performance of property and real estate companies listed on the Indonesia Stock Exchange (IDX). The sample selection uses a purposive sampling method of 42 property and real estate companies that meet the criteria. The research period is divided into 2 namely before the Loan to Value policy (2013-2014) and after the Loan to Value policy (2016-2017) with the Paired Sample t Test analysis technique. The test results show if the current ratio, Return on Asset, Return on Equity and Debt to Asset have significant differences between before and after the LTV policy is applied. While the fast ratio, cash ratio, net profit margin and Debt to Equity did not show a significant difference. Keywords: Financial Performance, Loan to Value, Property and Real Estate, Profitability Ratio, Liquidity Ratio, Solvability Ratio.

scholarly journals Evaluation and Comparison of Financial Soundness of Islamic and Conventional Private Commercial Banks in Bangladesh: A CAMEL Approach

2020 ◽  
pp. 128-140
Keyword(s):  
Quality Management ◽  
Stock Exchange ◽  
Capital Adequacy ◽  
Islamic Banks ◽  
Management Quality ◽  
Significant Difference ◽  
Financial Soundness ◽  
Marginal Status ◽  
Conventional Banks ◽  
Asset Quality

This article evaluates and compares the financial soundness of Islamic and conventional PCBs operating in Bangladesh based on the CAMEL approach over the period 2015 to 2019. For this purpose, the authors select a sample of 17 Conventional PCBs and 6 Islamic PCBs listed on the Dhaka Stock Exchange. In terms of composite CAMEL ratings, none of the banks is found to be strong or satisfactory in financial soundness in 2019. Out of 17 conventional banks, 13 of them are in a fair position i.e. having financial, operational, or compliance weakness and need more than normal supervision and regulation to address the deficiencies. Another 4 conventional banks are in a marginal position means that they are in serious financial problems and need close supervision and regulation. Ranking of conventional banks based on composite CAMEL ratings shows that Brac Bank Ltd. is in top position (Score 2.65) with Bank Asia Ltd. securing second position (score 2.7) while AB Bank Ltd., IFIC Bank Ltd, One Bank Ltd., and Mutual Trust Bank Ltd. are in the worst position with marginal status. Among 6 Islamic banks, 5 are in a fair position and only 1 in a marginal position in 2019. Shahjalal Islami Bank Ltd. secures the top position (Score 2.8) with fair status and Social Islami Bank Ltd. is in the worst position with marginal status. Independent sample test is used to see whether there is any significant difference between Islamic and Conventional PCBs concerning CAMEL parameters. The study finds that except for liquidity there is no significant difference in capital adequacy, asset quality, management quality, and earnings quality. The study also reveals that there is no significant difference in the average CAMEL ratings of two types of Banking. However, on average Islamic banks have better asset quality, management quality while conventional banks have better capital adequacy, earnings, and liquidity.

Risk disclosure and financial performance: the case of Islamic and conventional banks in the GCC

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ayman E. Haddad ◽  
Hussain Alali
Keyword(s):  
Financial Performance ◽  
United Arab Emirates ◽  
Best Practice ◽  
Annual Reports ◽  
Risk Disclosure ◽  
Return On Assets ◽  
Content Type ◽  
Return On Equity ◽  
Gcc Countries ◽  
Conventional Banks

Purpose This study aims to explore the extent of risk disclosure (RD) among conventional banks (CBs) and Islamic banks (IBs) listed on stock markets in the Gulf cooperation council (GCC). It also examines the influence of RD on the banks’ financial performance as measured by return on assets (ROA) and return on equity (ROE). Design/methodology/approach This study uses content analysis to examine RD in the annual reports of 16 CBs and 14 IBs in the GCC for a sample of 240 firm-year observations over the period 2007 to 2014. Findings The study shows no significant differences between the RD reported in the annual reports of CBs and that of IBs. On average, a CB reported 234 sentences while an IB disclosed 244 sentences of RD in its annual report. The authors also find that both types of banks had an upward trend over the periods. While the means of RD reported by CBs have significantly improved over the period, the RD reported by IBs has not. Similar results are also found when the authors compared the RD pre- and post-financial crisis period. Finally, the authors find that there is a significant association between RD and both models of financial performance (ROA and ROE) for IBs, after controlling other variables. However, RD has a significant association with only ROE for CBs. Research limitations/implications The bank selection was restricted to publicly traded banks in the GCC. Other financial institutions and different types of industries were not considered. Further research could determine whether the results obtained in this study could be generalized to different industries in the GCC and or in other countries. Practical implications This study provides evidence on the significant association between RD and the financial performance of CBs and IBs in GCC countries. This study could be helpful to regulatory authorities in encouraging banks to adopt the best practice of RD and thus promote banks’ transparency. Originality/value This is the first known study to examine the RD practices of both types of banks and their association with banks’ financial performance in five-GCC countries (Kuwait, Qatar, Saudi Arabia, United Arab Emirates and Bahrain), based on a longitudinal analysis of year-end annual reports, covering eight years period from 2007 to 2014.

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