IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v17y2024i11p523-d1524297.html
   My bibliography  Save this article

Performance Evaluation of Islamic Banking Services Industry: Evidence from GCC

Author

Listed:
  • Muhammad Hanif

    (Department of Finance, College of Business Administration, Ajman University, Ajman P.O. Box 346, United Arab Emirates)

Abstract

This study documents the comparative financial performance of the Islamic Banking Services Industry (IBSI) in the Gulf Cooperation Council (GCC) region. After drawing the performance evaluation framework (based on the CAMEL framework), the research conducted data analysis of the Islamic Banking Services Industry (IBSI) in the GCC region for 31 quarters (2013Q4–2021Q4). The analysis examines capital adequacy, asset quality, management performance, earnings, and liquidity management. Objectively classified data trends are reported through graphs. Additionally, the research documents internal determinants of financial performance. Findings suggest that the GCC-IBSI has shown overall progress in achieving primary objectives (commercial performance), including healthy capital adequacy, cost control, equity returns, and liquidity management. Capital adequacy, cost control, and liquidity management significantly contribute to financial performance. Managerial implications include cost control, reduction in non-performing loans, and prudent liquidity management. There exist opportunities in the GCC-IBSI for investors, given the mismatch in demand and supply of Islamic financial services. This study contributes to the literature by documenting findings on the achievements of the primary objective of IBSI in multiple GCC-IBSI markets comparatively.

Suggested Citation

  • Muhammad Hanif, 2024. "Performance Evaluation of Islamic Banking Services Industry: Evidence from GCC," JRFM, MDPI, vol. 17(11), pages 1-16, November.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:11:p:523-:d:1524297
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/17/11/523/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/17/11/523/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hanif, Muhammad & Farooqi, M Nauman, 2023. "Objective Performance Evaluation of The Islamic Banking Services Industry: Evidence from Pakistan," OSF Preprints e3pxd, Center for Open Science.
    2. Mona Esam Fayed, 2013. "Comparative Performance Study of Conventional and Islamic Banking in Egypt," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 3(2), pages 1-1.
    3. Imran Khokhar & Mehboob ul Hassan & Muhammad Nauman Khan & Md Fouad Bin Amin, 2020. "Investigating the Efficiency of GCC Banking Sector: An Empirical Comparison of Islamic and Conventional Banks," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(1), pages 220-235, January.
    4. Abdus Samad, 2004. "Performance Of Interest-Free Islamic Banks Vis-À-Vis Interest-Based Conventional Banks Of Bahrain," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 12(2), December .
    5. Saiful Azhar Rosly & Mohd Afandi Abu Bakar, 2003. "Performance of Islamic and mainstream banks in Malaysia," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 30(12), pages 1249-1265, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hanif, Muhammad & Farooqi, M Nauman, 2023. "Objective Performance Evaluation of The Islamic Banking Services Industry: Evidence from Pakistan," OSF Preprints e3pxd, Center for Open Science.
    2. Selim DEMEZ & Murat USTAOĞLU & Ahmet İNCEKARA, 2018. "Determining and Examining the Performance Index of Dual Banking System: A Panel Data Comparative Analyse for Turkey," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 68(2), pages 221-241, December.
    3. Samad, Abdus, 2018. "Is there any causality between Islamic banks’ return on depositors and conventional banks’ deposit interest: Evidence of causality from Bahrain’s financial market," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(4), pages 894-912, August.
    4. Jean Yves MOISSERON & Bruno Laurent MOSCHETTO & Frédéric TEULON, 2014. "Islamic finance: a review of the literature," Working Papers 2014-93, Department of Research, Ipag Business School.
    5. Abdus Samad, 2016. "Are Islamic Banks’ Non-bank Deposits Shock Resistant? A Comparison with Conventional Banks: Evidence from Bahrain," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 6(5), pages 1-6.
    6. Samar Issa, 2020. "Life after Debt: The Effects of Overleveraging on Conventional and Islamic Banks," JRFM, MDPI, vol. 13(6), pages 1-46, June.
    7. Abdus Samad & Mohammad Ashraful Ferdous Chowdhury, 2017. "Islamic Banks' Return on Depositors and Conventional Banks' Deposit Interest: Is there Causality? Evidence of Causality from Bangladesh," International Journal of Economics and Financial Issues, Econjournals, vol. 7(5), pages 432-439.
    8. Khan Tauseef & Ahmad Waqar & Rahman Muhammad Khalil Ur & Haleem Fazal, 2018. "An Investigation of the Performance of Islamic and Interest Based Banking Evidence from Pakistan," HOLISTICA – Journal of Business and Public Administration, Sciendo, vol. 9(1), pages 81-112, May.
    9. Mahmoud Al-Rdaydeh & Ali Matar & Odai Alghzwai, 2017. "Analyzing the Effect of Credit and Liquidity Risks on Profitability of Conventional and Islamic Jordanian Banks," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(12), pages 1145-1155, December.
    10. Neifar, Malika, 2020. "Interest-free versus Conventional banks- A Comparative Study using Linear and Nonlinear Panel Regression: Empirical Evidence from Turky and 6 MENA countries," MPRA Paper 101028, University Library of Munich, Germany.
    11. Khawla Bourkhis & Mahmoud Sami Nabi, 2011. "Have Islamic Banks Been More Resistant Than Conventional Banks to the 2007-2008 Financial Crisis?," Working Papers 616, Economic Research Forum, revised 08 Jan 2011.
    12. Ramlan, Nur Hu Yani, 2017. "Firm Risk and Performance: The Role of Corporate Governance in Bertam Alliance Berhad," MPRA Paper 78378, University Library of Munich, Germany, revised 01 Apr 2017.
    13. Imène BERGUIGA & Philippe ADAIR, 2019. "The performance of Islamic banks in the MENA region: Are specific risks a minor attribute?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 49, pages 5-23.
    14. Hussein Khasharmeh, 2018. "Does Liquidity Influence Profitability in Islamic Banks of Bahrain: An Empirical Study?," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 9(2), pages 236-248, April.
    15. Mohamed Ali Trabelsi & Naama Trad, 2017. "Profitability and risk in interest-free banking industries: a dynamic panel data analysis," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing Limited, vol. 10(4), pages 454-469, October.
    16. Maira Abrar & Sohail Abbas & Shazia Kousar & Muhammad Mushtaq, 2023. "Investigation on the Effects of Customer Knowledge, Political Support, and Innovation on the Growth of Islamic Banking System: a Case Study of Pakistan," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 946-965, June.
    17. repec:mth:ijafr8:v:8:y:2018:i:4:p:227-247 is not listed on IDEAS
    18. Aliyu, Shehu Usman Rano, 2015. "Developing Islamic Liquidity Management Instruments: Resolving the Impasse between Central Bank of Nigeria (CBN) and Jaiz Bank Plc," MPRA Paper 68898, University Library of Munich, Germany, revised 07 Feb 2016.
    19. Hasan, Zubair, 2005. "Evaluation of Islamic banking performance: On the current use of econometric models," MPRA Paper 6461, University Library of Munich, Germany.
    20. Abdus Samad, 2022. "Is there any Causality between the Islamic Banks Deposit Returns and the Conventional Banks Interest Rates? Evidence from Malaysian Commercial Banking," International Journal of Economics and Financial Issues, Econjournals, vol. 12(3), pages 18-28, May.
    21. repec:ipg:wpaper:2014-093 is not listed on IDEAS
    22. Neifar, Malika, 2020. "Different dimensions Bank performance comparisons IBs vs CBs – Quatar case," MPRA Paper 101375, University Library of Munich, Germany.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:17:y:2024:i:11:p:523-:d:1524297. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.