The Effect of the Arab Spring on the Performance of Islamic and Conventional Banks in Egypt: Which Model Performs Better Amidst Crisis?

Zar-Tashiya Khan, Andres Ramirez and David Ketcham

International Journal of Financial Research, 2020, vol. 11, issue 4, 180-194

Abstract: This empirical study analyzes financial institutions and performance in times of external crisis and whether a difference in performance between Islamic (IBs) and conventional (CBs) bank models exists. Egypt surrounding the Arab Spring (2009-2013) is taken as a case study, comparing 6 CBs and 3 IBs. Financial ratio analysis is the main method employed, allowing performance to be measured by efficiency, capital adequacy, profitability, solvency, liquidity, and credit risk performance. Due to small sample size, the nonparametric Mann-Whitney U test and effect size analysis assess the significance of the ratio analysis results. Results show CBs have superior performance in all indicators other than Cost-Income and NIM. Efficiency performance for both models were equally volatile or alternately stable with progression through the crisis, while IBs increased capital adequacy and solvency during the crisis. IBs profitability was significantly negatively impacted by the crisis, other than related to NIM, while CBs increased profitability rates. IBs liquidity worsened, then improved midway through the crisis while CBs stabilized liquidity rates throughout. IBs improved credit risk midway through the crisis while CBs declined. Nonparametric results hold observed differences are insignificant and have weak effect size for all but the TENL ratio.

Keywords: financial crises; Islamic banks; Arab Spring; Egypt; performance evaluation; financial ratio analysis (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciedu.ca/journal/index.php/ijfr/article/view/18335/11255 (application/pdf)
http://www.sciedu.ca/journal/index.php/ijfr/article/view/18335 (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: https://EconPapers.repec.org/RePEc:jfr:ijfr11:v:11:y:2020:i:4:p:180-194

DOI: 10.5430/ijfr.v11n4p180

Access Statistics for this article

International Journal of Financial Research is currently edited by Gina Perry

More articles in International Journal of Financial Research from International Journal of Financial Research, Sciedu Press
Bibliographic data for series maintained by Gina Perry ().