THE EFFECTS OF THE GLOBAL CRISIS ON ISLAMIC AND CONVENTIONAL BANKS: A COMPARATIVE STUDY

This paper examines the performance of Islamic banks (IBs) and conventional banks (CBs) during the recent global crisis by examining the impact of the crisis on profitability, credit and asset growth, and external ratings in a group of countries where the two types of banks have significant market s...

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Bibliographic Details
Published in:Journal of international commerce, economics and policy economics and policy, 2011-12, Vol.2 (2), p.163-200
Main Authors: HASAN, MAHER, DRIDI, JEMMA
Format: Article
Language:English
Subjects:
conventional banks
Credit
Economic crisis
financial crisis
Financial performance
financial stability
G20
G21
G28
G32
Islamic banking
Islamic banks
Islamic economics
Islamic theology
Profitability
Regression analysis
Risk management
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Summary:This paper examines the performance of Islamic banks (IBs) and conventional banks (CBs) during the recent global crisis by examining the impact of the crisis on profitability, credit and asset growth, and external ratings in a group of countries where the two types of banks have significant market share. Our analysis suggests that IBs have been affected differently than CBs. Factors related to IBs' business model helped limit the adverse impact on profitability in 2008, while weaknesses in risk management practices in some IBs led to a larger decline in profitability in 2009 compared to CBs. IBs' credit and asset growth performed better than did that of CBs in 2008–2009, contributing to financial and economic stability. External rating agencies' re-assessment of IBs' risk was generally more favorable.
ISSN:1793-9933
1793-9933
DOI:10.1142/S1793993311000270