Economics at your fingertips  

Are Islamic Banks More Resilient To Global Financial Crisis Than Conventional Banks?

Feryel Ouerghi
Additional contact information
Feryel Ouerghi: Assistant Professor, Department of Economic, ESSSCT- University of Tunis, TUNISIA

Asian Economic and Financial Review, 2014, vol. 4, issue 7, 941-955

Abstract: Development of global finance in recent years is marketed with the fastest growth in Islamic finance. The recent global financial crisis is characterized by the failure of a number of conventional banks. This led many researchers to reexamine the efficiency of Islamic banks compared to conventional ones and to study their capacity to resist to the financial crisis.The objective of our analysis is to study if Islamic banks are more resilient than conventional banks to the recent global financial crisis. To do this, two empirical investigations are proposed. The first one is based on the equality mean test. We compare the performance of IBs and CBs during global crisis (2007-2008) and after the crisis (2009-2010) in term of profitability, liquidity, efficiency, capital adequacy and leverage. The second investigation uses the Z-score as an indicator of bank stability in order to study the impact of the crisis on IBs and CBs. The main result derived from the first empirical test show that, when we consider the two periods, IBs become less profitable, more prone to credit risk and less efficient than CBs in the post crisis period. From the second investigation, we conclude that small banks fared better than large ones, IBs are less financially stable than CBs and large IBs perform better than large CBs, as suggested by Cihak and Hesse (2008).

Keywords: Islamic banking; Conventional banking; Financial crisis; PLS system; Z-score; Ratio analysis. (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed

Downloads: (external link) (application/pdf) (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Asian Economic and Financial Review is currently edited by Dr. Qazi Muhammad Adnan Hye

More articles in Asian Economic and Financial Review from Asian Economic and Social Society Sadeeq Block, Near Fawara Chowk, Abbasia Town, Rahim Yar Khan - 64200, Punjab, Pakistan.
Bibliographic data for series maintained by Chan Hoi Yan ().

Page updated 2019-05-02
Handle: RePEc:asi:aeafrj:2014:p:941-955