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Working Paper Series - Do Islamic Banks Perform Better than Conventional Banks? Evidence from Gulf Cooperation Council countries



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Do Islamic Banks Perform Better than Conventional Banks? Evidence from Gulf Cooperation Council countries


Volume : 0

No : 0

ISSN : WPS1011

Publisher : Arab Planning Institute - Kuwait

Author (s) : Hadeel S. AbuLoghod 

Published Date : 1/1/2010


Contents :
Islamic Banking has beengrowing worldwide significantly in the past three decades and is developingremarkably in the Southeast Asia, Middle East and even in Europeand in North America. The Gulf CooperationCouncil Countries (GCC), have dual banking system where Islamic andconventional banks are operating side by side. The purpose of this paper is tocompare the financial performance (profitability, liquidity and structure) ofthe two banking styles over the 2000-2005 time period. Among other findings theempirical results show no significant differences in terms of profitability.However, Islamic banks are less exposed to liquidity risk. On the other hand,conventional banks depend more on external liabilities than Islamic banks.Naturally, GCC markets showed that customers were more attracted to usefinancial instruments offered by Islamic banks. Finally, no statisticalsignificant differences were found on internal growth rate for both types ofbanking, which implies that this largely depends on the management style andthe general performance of the specific bank. 

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