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The Effects of the Global Crisis on Islamic and Conventional Banks: A Comparative Study

Author/Editor: Hasan, Maher | Dridi, Jemma
Authorized for Distribution: September 1, 2010
Electronic Access: Free Full Text (PDF file size is 1,440KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: This paper examines the performance of Islamic banks (IBs) and conventional banks (CBs) during the recent global crisis by looking at the impact of the crisis on profitability, credit and asset growth, and external ratings in a group of countries where the two types of banks have significant market share. Our analysis suggests that IBs have been affected differently than CBs. Factors related to IBs‘ business model helped limit the adverse impact on profitability in 2008, while weaknesses in risk management practices in some IBs led to a larger decline in profitability in 2009 compared to CBs. IBs‘ credit and asset growth performed better than did that of CBs in 2008-09, contributing to financial and economic stability. External rating agencies‘ re-assessment of IBs‘ risk was generally more favorable.
 
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Series: Working Paper No. 10/201
Subject(s): Banking systems | Banks | Competition | Credit expansion | Financial assets | Financial crisis | Global Financial Crisis 2008-2009 | Islamic banking | Markets | Profit margins | Risk management
Author's keyword(s): Islamic banks | conventional banks | financial stability | financial crisis | mean test | regression analysis.
 
English  
    Published:   September 1, 2010        
            Format:   Paper
    Stock No:   WPIEA2010201   Pages:   46
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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