Islamic Bank Case Study

The year 1963 witnessed the foundation of the very first Islamic bank in Egypt, ever since that year and until today researchers are still interested in making researches that study the financial performance of Islamic and conventional banks. The global financial crisis that the world experiences every once in a while as in 2008, was the cause of the increase of the number of researchers, as they are interested in studying the financial performances of both systems; knowing that these studies can help preventing the crisis that may happen in the future.
Samad (2004) used profitability, liquidity risk, and credit risk in his search to counterweight the performance of the Islamic banks and commercial banks of Bahrain through the period of 1991-2001. By the use of the t-test he figured that there is no significant distinction in profitability and liquidity amidst Islamic banks and conventional banks. In addition, he pointed that regardless of the Islamic banks’ fresh entrance to the trade market they are giving the same performance as conventional banks. Moreover, Islamic banks are at a lower risk for outrunning conventional banks with regard to credit risk.
Jaffar and Manarvi (2011) surveyed the execution of Islamic banks and conventional banks in Pakistan through 2005-2009. They used CAMEL framework to resolve capital adequacy, …show more content…
As their regain on assets is high due to their lower overhead expenses, it does not necessarily imply that their competence is higher than conventional banks. In addition they saw that there is no matchmaking between their low asset employment and investment margin ratios. Thus, this study denotes that Islamic banks do not rely on interest-like products as much as conventional banks rely on efficiency