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The Effects of the Global Crisison Islamic and Conventional Banks; A Comparative Study

Jemma Dridi and Maher Hasan

No 10/201, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the performance of Islamic banks (IBs) and conventional banks (CBs) during the recent global crisis by looking at the impact of the crisis on profitability, credit and asset growth, and external ratings in a group of countries where the two types of banks have significant market share. Our analysis suggests that IBs have been affected differently than CBs. Factors related to IBs‘ business model helped limit the adverse impact on profitability in 2008, while weaknesses in risk management practices in some IBs led to a larger decline in profitability in 2009 compared to CBs. IBs‘ credit and asset growth performed better than did that of CBs in 2008-09, contributing to financial and economic stability. External rating agencies‘ re-assessment of IBs‘ risk was generally more favorable.

Keywords: Financial crisis; Financial stability; Financial assets; Banking systems; Competition; Credit expansion; Islamic banking; Markets; Global Financial Crisis 2008-2009; Risk management; Regression analysis; Profit margins; Islamic banks, conventional banks, mean test, banking, islamic bank, islamic finance, Financial Institutions and Services: General, Financial Institutions and Services: Government Policy and Regulation, (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara, nep-cwa, nep-fdg and nep-rmg
Date: 2010-09-01
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