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Performance and Productivity in Islamic and Conventional Banks: Evidence from the Global Financial Crisis

Alexakis, Christos, Izzeldin, Marwan, Johnes, Jill, Pappas, Vasileios (2018) Performance and Productivity in Islamic and Conventional Banks: Evidence from the Global Financial Crisis. Economic Modelling, 79 . pp. 1-14. ISSN 0264-9993. (doi:10.1016/j.econmod.2018.09.030) (KAR id:69325)

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Abstract

We assess the performance and productivity of Islamic and conventional banks using financial ratios, a two- and a four-component meta-frontier Malmquist productivity index (MPI). We focus on the relatively homogenous GCC region over the 2006-2012 period that covers the global financial crisis. We find that Islamic banks exhibit worse cost and profit performance but are on a par with regards to revenue performance compared to the conventional ones. The components of the meta-frontier MPI suggest that the technology of conventional banks improves markedly in years leading to the financial crisis and declines thereafter. Islamic banks show a similar but more muted pattern. By contrast, the pronounced within-Islamic bank group variation in technical efficiency and technology suggest that Islamic banks are quite heterogeneous as a group. Overall, the MPI analysis suggests that the two bank types are more aligned following the global financial crisis. Policy implications are subsequently discussed.

Item Type: Article
DOI/Identification number: 10.1016/j.econmod.2018.09.030
Uncontrolled keywords: Performance; Banking sector; Financial ratios; Meta-frontier Malmquist productivity analysis; Gulf Cooperation Council
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > Kent Business School > Accounting and Finance
Depositing User: Vasileios Pappas
Date Deposited: 01 Oct 2018 10:35 UTC
Last Modified: 02 Oct 2019 23:00 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/69325 (The current URI for this page, for reference purposes)
Pappas, Vasileios: https://orcid.org/0000-0003-1885-4832
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