Do Islamic and Conventional Banks Really Differ? A Panel Data Statistical Analysis

Fredj Jawadi, Abdoulkarim Idi Cheffou and Nabila Jawadi
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Abdoulkarim Idi Cheffou: EDC Paris Business School
Nabila Jawadi: IPAG Business School, Paris-Nice, IPAG LAB

Open Economies Review, 2016, vol. 27, issue 2, No 4, 293-302

Abstract: Abstract This study compares two types of banks: conventional banks and Islamic banks. Indeed, since the aftermath of the credit crunch and the global financial crisis (2008–2009), the former have been severely criticized, while the latter are increasingly considered as an alternative form of banking. From a panel sample of twenty major banks (ten conventional banks and ten Islamic banks) located in various developed and emerging countries over the period April 2006- February 2013, the present paper examines whether or not there are significant differences between the two banking systems. Our sample enables us to compare these international banking systems, taking the crisis impact and new regulations and supervisory rules into account. To this effect, we carried out econometric analyses of univariate and multivariate panel data, which pointed to two interesting findings. First, there are only a few significant differences between IBs and CBs in terms of financial risk. Second, PVAR (Panel Vector Autoregressive) estimates and the analysis of Impulse Response Functions (IRFs) indicate weak interactions between IBs and CBs, while panel causality tests reject the causality hypothesis from IBs to CBs.

Keywords: Conventional and Islamic banks; Financial crisis; Reputation; Panel data (search for similar items in EconPapers)
JEL-codes: C22 G15 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s11079-015-9373-9

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