Performance of islamic vs conventional banks in OIC countries: Resilience and recovery during Covid-19

Ghouse, Ghulam; Ejaz, Nafees; Bhatti, M. Ishaq; Aslam, Aribah

doi:10.1016/j.bir.2022.11.020

Cited by 10 publications

(5 citation statements)

References 55 publications

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“…In the second strand, several studies examine the difference in performance and stability between Islamic and conventional banks. (Aliani et al, 2022;Ashraf et al, 2022;Elnahass et al, 2021;Hasan, Chowdhury et al, 2021;Ramelli and Wagner, 2020) Ghouse, Ejaz, Bhatti, and Aslam (2023) compare the performance of Islamic and conventional banks before and during Covid-19 in six OIC (Organisation of Islamic Cooperation) countries. They show that during Covid-19, conventional banks did better than their counterpart ones, took less time to recover and had better Calmar ratios.…”

Section: H1 the Covid-19 Pandemic Decreases Financial Performance And...mentioning

confidence: 99%

Risk and performance of Islamic and conventional banks under COVID-19 pandemic: Evidence from MENA region

Ghenimi,

Chaibi,

Omri

2024

AGJSR

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PurposeThe aim of this study is to conduct a comparative analysis between Islamic and conventional banks in terms of whether Islamic banks was more or less resilient/risky than conventional counterparts to the pandemic shock. It also examines the role of capital in improving the performance and stability within the two banking systems.Design/methodology/approachThis study uses 82 banks from MENA (Middle East and North Africa) region for periods across 2011–2020, and employs a dynamic panel data approach to examine the resilience within both banking systems during the Covid-19 pandemic.FindingsThe results show that the Covid-19 pandemic has a negative impact on conventional banks' stability. However, Islamic banks performed better and were less risky than conventional ones. Banks with high-quality capital are more effective at controlling their risks and improving their performance during the pandemic.Practical implicationsThe results offer important financial observations and policy implications to many stakeholders engaging with banks. Actually, the findings of this study facilitate to the stakeholders and bankers to have an alluded picture about determinants of risk and performance. The results can be used by bankers’ policy decision-makers to improve and enhance their consideration for risk management, taking into consideration the type of banking systems.Originality/valueCompared to the various studies on the stability of Islamic and conventional banks, researchers have not sufficiently addressed the effect of the Covid-19 pandemic on risk and performance. Moreover, none of these studies has examined if Islamic banks was more or less resilient/risky than conventional counterparts to the pandemic shock. This leads the authors to identify the similarities and differences between two types of banks in the MENA region in a pandemic shock context.

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Section: H1 the Covid-19 Pandemic Decreases Financial Performance And...mentioning

confidence: 99%

Risk and performance of Islamic and conventional banks under COVID-19 pandemic: Evidence from MENA region

Ghenimi,

Chaibi,

Omri

2024

AGJSR

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“…This rationale is based on the religious beliefs of Muslim customers, as previously indicated by Al-Atyat (2007), Mamun (2007), and Mustafa (2006). Additionally, the decision to convert into an Islamic bank is motivated by the resilience of Islamic banks in times of crisis, such as the Covid-19 pandemic, according to Ghouse et al (2022) and Rizwan et al (2022). Conventional banks, as reported by Bilgin et al (2021), are more vulnerable to instability in countries with greater religiosity and higher profit-loss sharing contracts.…”

Section: Literature Reviewmentioning

confidence: 99%

The impact of conversion on market share in Indonesian Islamic banks

Arif

Ihsan

Zulpawati³

et al. 2023

Banks and Bank Systems

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The process of converting a conventional bank into a fully-fledged Islamic bank is becoming a popular alternative solution, alongside spin-off, for smaller banks. Two Indonesian banks, Bank of Aceh Sharia and Bank of NTB Sharia, completed this conversion in 2016 and 2018, respectively. This study uses a mixed-methods approach to examine the impact of this conversion on market share, using both quantitative regression with a dummy variable and qualitative analysis through focus group discussions with executive management and in-depth interviews with the Sharia supervisory boards of the two converted banks. The study found that the conversion positively impacted market share, with the default rate and level of capital also playing a role. Prior to conversion, the Indonesian sharia banking industry had less than a 5% market share, but after the conversion, it reached 6.7%. The two converted banks were able to increase their market share to 7% and 2%, respectively. These results suggest that converting into a full-fledged Islamic bank is a viable alternative solution for smaller conventional banks, rather than opting for spin-offs or mergers.

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“…This can reduce the demand for loans and have a negative impact on the income of Islamic banks. Businesses and individuals are facing significant financial challenges due to the economic impact of COVID-19 (Ghouse et al, 2022). This can lead to increased credit risk for Islamic banks, with an increased likelihood of late payments or loan defaults.…”

Section: Introductionmentioning

confidence: 99%

Exploring The Cross Countries Endurance, Evidence of Indonesian and Malaysian Sharia Banks Financial Performance

Kurniawan,

Normasyhuri,

Anggraeni

2023

Jurnal Ilmiah Akuntansi dan Bisnis

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The Islamic banking industry should be balanced with good financial performance to create stakeholders' trust in the funds they invest. This study examines financial performance by comparing the Islamic banking industry in Indonesia and Islamic banks in Malaysia during the Covid-19 pandemic using the MSI (Maqashid Sharia Index) and CAMELS (Capital, Asset, Management, Earning, Liquidity, Sensitivity of Market Risk) methods. The research adopts a quantitative design with a comparative approach. The implementation research period was in the era of covid-19 with the period 2020-2022. Sampling used purposive sampling at Indonesian Islamic Commercial Banks and Malaysian Islamic Commercial Banks with a total sample of 36. Hypothesis testing using the Independent T-Test. The results of the study provide the fact that the financial performance of the Islamic banking industry in Indonesia has good value and compliance compared to Islamic banks in Malaysia based on the MSI and CAMELS in the conditions of Covid-19. Keywords: islamic bank, financial performance, COVID-19

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Performance of islamic vs conventional banks in OIC countries: Resilience and recovery during Covid-19

Cited by 10 publications

References 55 publications

Risk and performance of Islamic and conventional banks under COVID-19 pandemic: Evidence from MENA region

Risk and performance of Islamic and conventional banks under COVID-19 pandemic: Evidence from MENA region

The impact of conversion on market share in Indonesian Islamic banks

Exploring The Cross Countries Endurance, Evidence of Indonesian and Malaysian Sharia Banks Financial Performance

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