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The Performance of Islamic Vs. Conventional Banks: Evidence on the Suitability of the Basel Capital Ratios

Mohammad Bitar (), M. Kabir Hassan (), Kuntara Pukthuanthong () and Thomas Walker ()
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Mohammad Bitar: Concordia University
Kuntara Pukthuanthong: University of Missouri
Thomas Walker: Concordia University

Open Economies Review, 2018, vol. 29, issue 5, 1003-1038

Abstract: Abstract This paper examines the effect of various types of bank capital on the profitability and efficiency of conventional and Islamic banks. Our results show that higher quality forms of capital improve the profitability and efficiency for both systems although the results are stronger for conventional banks. The capital effect is more pronounced for large, too-big-to-fail, and highly capitalized banks. The results are robust across various subsamples, alternative profitability and efficiency measures, and different estimation techniques.

Keywords: Bank capital; Basel capital; Profitability; Efficiency (search for similar items in EconPapers)
JEL-codes: G21 G28 P43 P47 (search for similar items in EconPapers)
Date: 2018
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