Measuring performance differences between Islamic and conventional banking.

• Main Authors: Fok, Mang Juin., Toh, You Fu., Weng, Jincheng.
• 其他作者: Nanyang Business School
• 格式: Final Year Project
• 語言: English
• 出版: 2011
• 主題: DRNTU::Business::Finance::Bank management
• 在線閱讀: http://hdl.handle.net/10356/44210
• 機構: Nanyang Technological University

In this study, we aim to investigate the comparative performances of both Islamic and conventional banks in both economic boom and down times, the main motivation being the widespread exploration of Islamic banking as an alternative viable banking model after conventional banking practices have failed in the recent financial crisis. Performance is measured along five aspects, namely profitability, efficiency, liquidity, solvency and market value ratio. The performance comparison is extended to worldwide regions in order to increase the generalizability and representativeness of the results. Statistical analysis is then employed to detect any significant differences in the banks’ performances. The results showed that in the period of economic downtime, Islamic banks are more immunized than conventional banks in the aspect of profitability, and the converse is true in the event of economic boom times. Further, Islamic banks are found to have higher liquidity during downtime, while they are more solvent than conventional banks regardless of economic conditions. Correlation analysis performed showed that there is no significant relationship between profitability and liquidity for both Islamic and conventional banks. In contrast, profitability and solvency are found to be positively related for conventional banks but not Islamic banks. With that, investors can be better informed and equipped to manage their investment portfolios by taking into account of differences between investments in Islamic and conventional banks.