Impact of COVID-19 on bank performance: a comparison between Islamic vs conventional banks in OIC countries

Abdulaziz Alhaddab, M. Kabir Hassan and Rashedul Hasan

Accounting Research Journal, 2025, vol. 38, issue 3-4, 409-423

Abstract: PurposeThis paper aims to investigate the financial performance of Islamic banks compared with conventional banks in Organization of Islamic Cooperation (OIC) countries during the COVID-19 pandemic.Design/methodology/approachUsing data from 230 banks across 15 OIC countries from 2016 to 2022, this study uses pooled ordinary least squares (OLS) and random effects models to assess the impact of the pandemic on bank performance.FindingsThe findings indicate that while the pandemic negatively impacted both Islamic and conventional banks, Islamic banks outperformed their conventional counterparts in terms of return on assets (ROA), return on equity (ROE) and Tobin’s Q.Originality/valueFurthermore, the study identifies a potential channel for this outperformance, as Islamic banks outperformed conventional banks when capital adequacy ratios (CAR) are higher. Overall, the study underscores the resilience of Islamic banking during financial crises and provides insights for policymakers to enhance banking stability in OIC countries.

Keywords: Performance; Islamic bank; Covid-19; OIC countries (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-10-2024-0346

DOI: 10.1108/ARJ-10-2024-0346

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