Comparison between Islamic Banking and Conventional Banking

Ing. Md Sahriar Nafiz

Diplomová práce

Anotace:

The purpose of this paper is to provide comparisons and compare the financial performance of Islamic banking and Conventional banking system over the 2014-2017 time period. Banks offer different types of products and services for the satisfaction of customers for their financial needs. Conventional banking is based on interest while Islamic banking offers interest-free banking. The performance of both banking systems was evaluated by using Ratio (profitability, liquidity, efficiency and solvency) analysis, which is very common in measuring bank’s performance. However, Islamic banks are less exposed to liquidity risk. On the other hand, conventional banks depend more on external liabilities than Islamic banks. The profitability performance of conventional banks was comparatively higher than Islamic banks but both banks were making good profits. The efficiency performance of Islamic banking system is better than Conventional banking system. The solvency position of both banking systems seems not as good as compared to the industry average. Although, there are some differences between the performance of both banking system. In some cases, Islamic bank performed well than conventional bank and some cases conventional banks performed well than Islamic bank.

Abstract:

The purpose of this paper is to provide comparisons and compare the financial performance of Islamic banking and Conventional banking system over the 2014-2017 time period. Banks offer different types of products and services for the satisfaction of customers for their financial needs. Conventional banking is based on interest while Islamic banking offers interest-free banking. The performance of both banking systems was evaluated by using Ratio (profitability, liquidity, efficiency and solvency) analysis, which is very common in measuring bank’s performance. However, Islamic banks are less exposed to liquidity risk. On the other hand, conventional banks depend more on external liabilities than Islamic banks. The profitability performance of conventional banks was comparatively higher than Islamic banks but both banks were making good profits. The efficiency performance of Islamic banking system is better than Conventional banking system. The solvency position of both banking systems seems not as good as compared to the industry average. Although, there are some differences between the performance of both banking system. In some cases, Islamic bank performed well than conventional bank and some cases conventional banks performed well than Islamic bank.

Keywords

Islamic and Conventional bank, Financial Performance, Financial Ratios, Comparison of Islamic and Conventional bank, Liquidity, Profitability, Efficiency, solvency

Jazyk práce: angličtina

Datum vytvoření / odevzdání či podání práce: 4. 1. 2019

Obhajoba závěrečné práce

• Obhajoba proběhla 4. 2. 2019
• Vedoucí: Ing. Dagmar Linnertová, Ph.D.
• Oponent: Ing. Luděk Benada, Ph.D.

Masarykova univerzita

Ekonomicko-správní fakulta

Magisterský studijní program / obor:
Finance a účetnictví / Finance (angl.)