Fintech and Islamic banking growth: new evidence

Mouwafac Sidaoui, Faten Ben Bouheni, Zandanbal Arslankhuyag and Samuele Mian

Journal of Risk Finance, 2022, vol. 23, issue 5, 535-557

Abstract: Purpose - The purpose of this study is to evaluate the global developments in the area of fintech solutions by analyzing Islamic and Conventional banks core accounting and market analysis IFIs and their impact on financial inclusion within its core markets. Design/methodology/approach - The authors collect and analyze annual accounting and market Data of the top ten largest Islamic banks and the top ten US Conventional banks, in terms of Total Asset and Market Capitalization, from Bloomberg Data. Findings - The analysis of Bloomberg data shows higher risk-return for Islamic banks–except ROE Market measure that we suggest-than US conventional banks. Nonetheless, Islamic banking grew faster than conventional banking over the period 2006–2021. As a business model, we find that Islamic banks take more credit with more than seventy percent of their profit from loans, while US conventional banks struggle to reach seventy percent interest rate ratio. The authors’ research documents that Fintech and digitalization are driving Islamic finance growth during financial and economic downturns. Research limitations/implications - FinTech data is not available for banks, further insights of analysis on FinTech and Innovations in the banking sectors. Practical implications - Islamic banks continuously innovate to satisfy the users of their services and Fintech is opportune to innovation. This study could be interesting for both practitioners and academics wishing to understand and compare Islamic and conventional banking futures. Social implications - The authors compared two banking systems, the US and Islamic Banks, which could be useful for users to differentiate between those banking operations. Originality/value - The authors collected accounting and market data from Bloomberg of top 10 Islamic and top 10 US Conventional banks from 2006 to 2021 to examine Risk-Return, Growth and Business Model of those banks. The authors propose a new Risk-Return measure ROE-Market and its volatility.

Keywords: Innovation; Growth; Financial institutions; FinTech; Risk/return (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jrfpps:jrf-03-2022-0049

DOI: 10.1108/JRF-03-2022-0049

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