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Bank overall financial strength: Islamic versus conventional banks

Doumpos Michael, Hasan Iftekhar, Pasiouras Fotios

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URIhttp://purl.tuc.gr/dl/dias/B1429461-DCEF-40F2-8978-814F8C6E3EE2-
Identifierhttps://www.sciencedirect.com/science/article/pii/S0264999317304923?via%3Dihub-
Identifierhttps://doi.org/10.1016/j.econmod.2017.03.026-
Languageen-
Extent11 pagesen
TitleBank overall financial strength: Islamic versus conventional banksen
CreatorDoumpos Michaelen
CreatorΔουμπος Μιχαηλel
CreatorHasan Iftekharen
CreatorPasiouras Fotiosen
CreatorΠασιουρας Φωτιοςel
PublisherElsevieren
Content SummaryA number of recent studies compare the performance of Islamic and conventional banks with the use of individual financial ratios or efficiency frontier techniques. The present study extends this strand of the literature, by comparing Islamic banks, conventional banks, and banks with an Islamic window with the use of a bank overall financial strength index. This index is developed with a multicriteria methodology that allows us to aggregate various criteria capturing bank capital strength, asset quality, earnings, liquidity, and management quality in controlling expenses. We find that banks differ significantly in terms of individual financial ratios; however, the difference of the overall financial strength between Islamic and conventional banks is not statistically significant. This finding is confirmed with both univariate comparisons and in multivariate regression estimations. When we look at the bank financial strength within regions, we find that conventional banks outperform both the Islamic banks and the banks with Islamic window in the case of Asia and the Gulf Cooperation Council; however, Islamic banks perform better in the MENA and Senegal region. Second stage regressions also reveal that the bank overall financial strength index is influenced by various country-specific attributes. These include control of corruption, government effectiveness, and operation in one of the seven countries that are expected to drive the next big wave in Islamic finance. en
Type of ItemPeer-Reviewed Journal Publicationen
Type of ItemΔημοσίευση σε Περιοδικό με Κριτέςel
Licensehttp://creativecommons.org/licenses/by/4.0/en
Date of Item2018-04-23-
Date of Publication2017-
SubjectBank strengthen
SubjectIslamic bankingen
SubjectMulticriteriaen
Bibliographic CitationM. Doumpos, I. Hasan and F. Pasiouras, "Bank overall financial strength: Islamic versus conventional banks," Econ. Model, vol. 64, pp. 513-523, Aug. 2017. doi: 10.1016/j.econmod.2017.03.026en

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