The Tunisian Islamic and conventional banks: a performance comparative study

Abstract

PurposeThis paper aims to determine whether Islamic banks (IBs) and conventional banks (CBs) in Tunisia are distinguishable from one another based on financial characteristics during the 2005–2014 period covering the 2008 global financial crisis (GFC) and the 2011 Tunisian revolution.Design/methodology/approachFor the comparison between IBs and CBs, 11 hypotheses are formulated to distinguish between the two types of banks. The authors use a univariate analysis based on the multi-dimension figures investigation and a multivariate one based on the robust OLS technique for panel linear regression with mixed effects.FindingsBank-specific factors, dummy and dummy interacting variables indicate that there are differences between Islamic and conventional bank behavior. Both methods show that IBs are more liquid, more profitable and riskier than CBs. Post-2011 Tunisian revolution, small IBs (small CBs) are more (less) solvent, large IBs are more stable and both types of banks are more liquid, which explain why Tunisian governments have relay on bank system to cover budget deficits post-2011 revolution.Originality/valueIn investigating the feature of IBs and CBs from the Tunisian context, the authors take into account the effect of two abnormal events (2008 GFC and 2011 Tunisian revolution) on IBs through interaction variables.

Competition, stability, and institutional environment: The case of dual banking economies

“…For example, we employ structural (Herfindahl–Hirschman Index) as well as non‐structural (Lerner index) measures of competition that are used by Almarzoqi et al (2015). In addition, Mirzaei (2011) used structural measures to proxy concentration but their data set only covers the period up to 2008. Islamic banking industry has evolved since that time.…”