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Profitability and persistency in the service industry: the case of QISMUT+3

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  • Alimshan Faizulayev
  • Eralp Bektas
  • Abdul Ghafar Ismail

Abstract

The aim of this study is to evaluate profitability determinants and profit persistency of Islamic and conventional banks operating in top nine Islamic Finance oriented-countries that are named as QISMUT+3 (Qatar, Indonesia, Saudi Arabia, Malaysia, UAE, Turkey, Bahrain, Kuwait and Pakistan). For this purpose, it uses bank specific, market structure, and macroeconomic variables that are utilized from Orbis Bank Focus and World Bank database. To capture endogeneity problem and unobserved heterogeneity, dynamic approach is used by employing system GMM estimation. The major findings of the study show higher profit persistency of Islamic banks (IBs) than conventional banks (CBs). The results also suggest that profitability determinants of IBs and CBs are different. Concerning the risk behavior, bank capitalization and credit risk variables are more important for CBs. Crisis results attribute better resilience to Islamic banks.

Suggested Citation

  • Alimshan Faizulayev & Eralp Bektas & Abdul Ghafar Ismail, 2020. "Profitability and persistency in the service industry: the case of QISMUT+3," The Service Industries Journal, Taylor & Francis Journals, vol. 40(3-4), pages 290-314, March.
    • Handle: RePEc:taf:servic:v:40:y:2020:i:3-4:p:290-314
    DOI: 10.1080/02642069.2018.1461210
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    Cited by:

    1. Ayşegül Aytaç Emin & Başak Dalgıç & Tawfik Azrak, 2021. "Constructing a banking fragility index for Islamic banks: definition impact on the predictive power of an early warning system," Applied Economics Letters, Taylor & Francis Journals, vol. 28(18), pages 1589-1593, October.
    2. Xiaojuan He & Dervis Kirikkaleli & Melike Torun & Zecheng Li, 2021. "Modeling Economic Risk in the QISMUT Countries: Evidence From Nonlinear Cointegration Tests," SAGE Open, , vol. 11(4), pages 21582440211, October.

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