GRM 2010 GRM 2011

Abstract Details

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The performance of Islamic Banks: A Comparative Study of Conservative, Liberal and Moderate Institutions
Paper Proposal Text :
Islamic Financial Institutions (IFIs) can be classified, based on their approach and the strictness of adherence to Islamic principles, as Conservative, Moderate, and Liberal. In this study, a scorecard index is developed to classify the banks into Conservative, Moderate, and Liberal. The index includes the following main categories: retail products, wholesale products, other products, Shariah Board structure, legal aspects, AAIOFI/IFRS, and corporate governance mechanisms. This study examines the performance of Islamic Banks in GCC countries and other countries for the fiscal years 2007-2009 and seeks to determine the underlying factors that affect their performance. The paper attempts to examine if a significant difference is exist in profitability and efficiency of the three groups mentioned above as reported in their financial statements. This study uses major financial ratios to ascertain profitability and efficiency along with defining how the underlying variables are calculated by IFIs in these three groups. The sample used in this study is 107 Islamic Banks of which 39 Islamic Banks are in GCC. Major focus countries are GCC, Singapore, Malaysia, Pakistan, Iran, selected Middle East countries, UK, France, Germany and a few more selected European countries. The results reveal that there are significant differences in the performance between GCC Islamic Banks, in addition, significant differences are found between Islamic banks in the three groups. It is important to note that no study yet has examined the performance of Islamic banks using the same approach of this study. It is believed that policy makers, investors, customers, and others, may find the findings of this study beneficial.