Comparison between Islamic and Conventional Banking: Evidence from Malaysia

Abduallah, Al-Mamun and Qaiser Rafique, Yasser and Harry, Entebang and Md. Ashikur, Rahman and Thurai Murugam, Nathan and Shazali, Abu Mansor (2014) Comparison between Islamic and Conventional Banking: Evidence from Malaysia. International Journal of Islamic Banking & Finance, 4 (1). ISSN 2220-8291

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Abstract

Purpose: To determine the financial performance of Islamic banks and non-Islamic banks from 2003 to 2010 in Malaysia by applying the theory of Sharī’ah Conformity and Profitability model. Methodology: This study used accounting ratios which included profitability ratio, liquidity ratio and credit risk ratio to measure the financial performance of the Malaysian banks. Findings: Results indicate that conventional banks perform better in profitability, while Islamic banks perform better in liquidity and credit risk. In t-test of the return on asset (ROA) and total equity to net loans, there are no major difference between Islamic banks and non-Islamic banks. In the return on equity and common equity to total assets, there are statistically significant differences in these two groups. The statistically significant difference was shown in the area of liquidity which means that the Islamic banks liquidity performance has major difference with the non-Islamic banks. These finding are partially rejecting null hypothesis of profitability ratio and credit risk ratio. Moreover, the results are also rejecting null hypothesis of liquidity ratio, that there is statistically significant difference in the mean of liquidity ratio between Islamic banks and non-Islamic banks.

Item Type: Article
Uncontrolled Keywords: Islamic banking, performance measurement, conventional banking, ROA, Sharī’ah principle, research, Universiti Malaysia Sarawak, unimas, university, universiti, Borneo, Malaysia, Sarawak, Kuching, Samarahan, ipta, education
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Divisions: Academic Faculties, Institutes and Centres > Faculty of Economics and Business
Depositing User: Karen Kornalius
Date Deposited: 19 Jul 2017 06:54
Last Modified: 19 Jul 2017 06:54
URI: http://ir.unimas.my/id/eprint/16945

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