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Are Islamic banks really more solvent than conventional banks in a financially stable period?

Achraf Haddad, Anis El Ammari and Abdelfettah Bouri
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Achraf Haddad: Researcher at a Laboratory of Finance, Governance, and Accounting, University of Sfax, Tunisia
Anis El Ammari: Associate Professor; Faculty of Economics and Management of Mahdia, Tunisia. Department Head of Accounting and Finance, University of Monastir, Tunisia
Abdelfettah Bouri: Director of Finance, Governance, and Accounting Laboratory, University of Sfax, Tunisia

Asian Journal of Empirical Research, 2019, vol. 9, issue 11, 346-366

Abstract: The knowledge value produced by this research was established in particular by the methodological challenges of the comparative study. Based on a process of bibliographic research, conditional observation, and using the Financial Ratio Analysis Method, the objective of this article is to solve the ambiguity of previous comparative research and innovate an equiprobable comparison between the solvencies of conventional and Islamic banks over the period of 2010-2018. Our study is not simply a matter of dealing generically with the financial solvency of conventional and Islamic banks. We also analysed the inherent implications that may alter the results of an operative evaluation of banks. Two samples were taken from two reference groups of population in the selected countries. The choice of banks is limited to countries whose banking systems incorporate both Islamic and conventional banks.? Each list bank was subsequently reduced on the basis of qualitative and quantitative filtering criteria. Therefore each conventional bank has an Islamic equivalent. This restriction reduced the sample size to 63 banks each. The selected banks are all large and listed on various stock exchanges. We found that conventional banks are more solvent than Islamic banks during a financially stable period.

Keywords: Conventional banks; Islamic banks; Solvency; Comparative study; Financial stable period (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:asi:ajoerj:2019:p:346-366