Financial performance of Islamic and conventional banks in the United Arab Emirates: A comparative study

The study was conducted to evaluate the financial performance of Islamic and conventional banks, so as to facilitate the bank’s stakeholders (i.e. depositors, bank management, shareholders, investors and the banking sector regulators respectively) with the true state of performance of the banks in the UAE banking sector. To achieve this, we assessed the financial performance of some selected Islamic and conventional banks in the UAE, by measuring their profitability, liquidity, risk and efficiency for the period 2009-2013. We made use of ten (10) important performance ratios to measure the financial performance of the banks in terms of their profitability, liquidity, risk and efficiency. The ratios includes Return on Asset (ROA), Return on Equity (ROE), Profit Expense Ratio (PER), Loan to Deposit Ratio (LDR), Loan to Asset Ratio (LAR), Debt to Equity Ratio (DTAR), and Debt to Total Asset Ratio (DTAR). Other ratios used include Interest Expense Ratio (IER), Operating Efficiency (OE) and Asset Utilization (AU). The performance of the banks were analysed using the 10 ratios by the banks inter-sectional ratio analysis technique, t-test analysis and regression comparing the results of the 2 set of banks to determine which of the bank performed better than the other. The study concluded from the results of the banks analysed that the Islamic banks are more profitable, more efficient and more liquid. However, both banks appeared to be indifferent in terms of credit risk.

Grantor dc:publisher

University of Namibia

Year dc:date.issued

2016

Author dc:creator

• Ibrahim, Ibrahim

• Financial performance

Language dc:language.iso

en

Handle dc:identifier.uri

http://hdl.handle.net/11070/2034

OAI identifier oai:identifier

oai:repository.unam.edu.na:11070/2034