An Empirical Analysis of Financial Performance of Retail and Wholesale Islamic Banks in Bahrain

Authors

  • Iqbal Thonse Hawaldar Assistant to the President for Accreditation and Quality Assurance and Associate Professor, Department of Accounting and Finance, College of Business Administration, Kingdom University, Bahrain
  • Lokesh Lokesh MBA Department, Sahyadri College of Engineering & Management, Mangalore-575007, Karnataka, India
  • Sheila Sison Biso Lecturer and Coordinator-Accreditation and Quality Assurance Office, Department of Business Management, College of Business Administration, Kingdom University, Bahrain

Keywords:

Islamic banks, Performance analysis, Retail banks, and Wholesale banks.

Abstract

Islamic banking, as an alternative to conventional banking system, is currently one of the most rapidly growing segments of the global financial market industry operating with more than 300 institutions spread over 75 countries.  Undoubtedly, Islamic banks has cogent contribution towards the economic growth of any nation.  This paper explores the analysis of the financial performance of retail and wholesale Islamic Banks operating in the Kingdom of Bahrain.  For the empirical investigation, six retail and seven wholesale Islamic banks were selected for the study. Financial ratio analysis, standard deviation and correlation analyses were employed for the time period 2009-2013.  The study found that there is a negative relationship among asset utilization ratio with staff cost to income ratio, operational efficiency ratio and cost to income ratio of retail Islamic Banks. Empirical results for wholesale Islamic banks revealed that there is a positive relationship among staff cost to income ratio, operational efficiency ratio and cost to income ratio.  

References

[1] Abdul-Majid, M., Saal, D. S., & Battisti, G. “The impact of Islamic banking on the cost efficiency and productivity change of Malaysian commercial banks”. Applied Economics, Vol. 43, pp.2033-2054, 2011.
[2] Abuzar M.A. Eljelly & Ahmed Abdelgadir Elobeed. "Performance indicators of banks in a total Islamic banking system: the case of Sudan", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 6, pp.142-155, 2013.
[3] Alam, A. H. M. N. B., & Shahabuddin, A. M. “The Impact of Investment Decision Quality of Islamic Banks in Bangladesh: A Critical Review”. Developing Country Studies, Vol. 3, pp. 36-40, 2013.
[4] Badreldin, A. M. (2009). “Measuring the Performance of Islamic Banks by Adapting Conventional Ratios”, German University in Cairo Working Paper No. 16. Available on http://ssrn. Com/abstract, 1492192.
[5] Iqbal, M. “Islamic and Conventional Banking in the Nineties: A Comparative Study”. Islamic Economic Studies, Vol. 8, pp.1-28, 2001.
[6] I.Merchant. “Empirical Study of Islamic Banks Versus Conventional Banks of GCC”. Global Journal of Management and Business Research , pp. 31-41, 2012.
[7] Jaffar, M., & Manarvi, I. “Performance Comparison of Islamic and Conventional Banks in Pakistan”. Global Journal of Management and Business Research, Vol. 11, pp. 59-66, 2011.
[8] Kader, R.A., &Leong,Y.K. “The Impact of Interest Rate Changes on Islamic Banks Financing”. International Review of Business Research Papers, Vol. 5, pp. 189-201, 2009.
[9] Lama Al-Kayed, Sharifah Zain and JaritaDuasa. “The relationship between capital structure and performance of Islamic banks", Journal of Islamic Accounting and Business Research, Vol. 5, pp. 158-181, 2014.
[10] Moh'd M,A., & Omari, H.O. “Performance Efficiency of the Jordanian Islamic Banks using Data Envelopment Analysis and Financial Ratios Analysis”. European Scientific Journal, Vol. 9, 2013.
[11] Moin, M. S. “Comparative Analysis between Islamic Banking and Conventional Banking”. 2008.
[12] Muhammad Asif Khan and Majid Ali. “Gauging Profitability and Liquidity of Islamic Banks: Evidence from Malaysia and Pakistan”. International Journal of Accounting and Financial Reporting, Vol. 5, 2015.
[13] Siraj, K. K., & Pillai, P. S. “Comparative study on performance of Islamic banks and conventional banks in GCC region”. Journal of Applied Finance & Banking, Vol. 2, pp. 123-161, 2012.

Downloads

Published

2016-06-04

How to Cite

Hawaldar, I. T., Lokesh, L., & Biso, S. S. (2016). An Empirical Analysis of Financial Performance of Retail and Wholesale Islamic Banks in Bahrain. American Scientific Research Journal for Engineering, Technology, and Sciences, 20(1), 137–147. Retrieved from https://asrjetsjournal.org/index.php/American_Scientific_Journal/article/view/1726

Issue

Vol. 20 No. 1 (2016)

Section

Articles

License

Authors who submit papers with this journal agree to the following terms.