Islamic and conventional banks' soundness during the 2007–2008 financial crisis
Khawla Bourkhis and
Mahmoud Nabi
Review of Financial Economics, 2013, vol. 22, issue 2, 68-77
Abstract:
The recent global financial crisis has induced a series of failure of many conventional banks and led to an increased interest in the Islamic banking business model. This paper attempts to answer empirically the following question: What was the effect of the 2007–2008 financial crisis on the soundness of Islamic banks and their conventional peers? Using the Z-score as an indicator of bank stability, our regression analysis (covering a matched sample of 34 Islamic Banks (IBs) and 34 conventional banks (CBs) from 16 countries) shows that there is no significant difference in terms of the effect of the financial crisis on the soundness of IBs and CBs. This finding reveals that IBs are diverging from their theoretical business model which would have allowed them to keep the same level of soundness even during the crisis.
Keywords: Islamic banking; Conventional banking; Financial crisis (search for similar items in EconPapers)
JEL-codes: G01 G21 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (90)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1058330013000177
Full text for ScienceDirect subscribers only
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: https://EconPapers.repec.org/RePEc:eee:revfin:v:22:y:2013:i:2:p:68-77
DOI: 10.1016/j.rfe.2013.01.001
Access Statistics for this article
Review of Financial Economics is currently edited by T. K. Mukherjee and G. Whitney
More articles in Review of Financial Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().