Comparative Analysis between Islamic Banking andConventional

Topics: Islamic banking, Bank, Sharia Pages: 65 (13008 words) Published: November 29, 2014
Comparative Analysis between Islamic Banking and
Conventional Banking Firms in terms of
Profitability, 2006-2009

Alimshan Faizulayev

Submitted to the
Institute of Graduate Studies and Research
In Partial Fulfilment of the Requirements for the Degree of

Master of Science
in
Banking and Finance

Eastern Mediterranean University
May 2011
Gazimağusa, North Cyprus

Approval of the Institute of Graduate Studies and Research

________________________________
Prof. Dr. Elvan Yılmaz
Director

I certify that this thesis satisfies the requirements as a thesis for the degree of Master of Science in Banking and Finance.

________________________________
Assoc. Prof. Dr. Salih Katırcıoğlu
Chair, Department of Banking and Finance

We certify that we have read this thesis and that in our opinion it is fully adequate in scope and quality as a thesis for the degree of Master of Science in Computer Engineering.

________________________________
Asst. Prof. Dr. Eralp Bektaş
Supervisor

Examining Committee
1. Assoc. Prof. Dr. Eralp Bektaş

________________________________

2. Asst. Prof. Dr. Bilge Öney

________________________________

3. Asst. Prof. Dr. Nesrin Özataç

________________________________

ABSTRACT

This paper work is going to perform comparative analysis of Islamic Banking and Conventional Banking firms. This study will also touch the differences of the Islamic Banks and Conventional Banks in terms of historical origin, mobilizing of financial resources, and ways of generating profit, operating principles, and equity structure. The main focus of this comparative study is to evaluate and measure the difference in financial performance of the two dissimilar banking firms operating in different countries. To evaluate empirically performance of the banks, different financial ratios are going to be employed which are based on CAMEL framework. We plan to measure performance in terms of capital adequacy, asset quality, management, earnings and liquidity. For this purpose, we will refer to the banking literature to find most commonly used ratios. In this work, t-test, f-test, and regression analysis will be used to make hypothesis test and determine the ratio significance. Consequently, results from empirical analysis indicate that there is difference in profitability determinants.

Keywords: Islamic banking; conventional banking;

iii

ÖZ

Bu tez İslami Bankacılık ve Geleneksel Bankacılık sektörleri arasındaki olası performans farklılıklarını ortaya koymak için hazırlanmıştır. Araştırmada, İslami ve Geleneksel Bankacılığın mali kaynakların kullanımı, tarihsel kökenleri, para kazanma yöntemi ve özkaynak yapısının farklılıkları da ele alınmıştır. Yukarıda bahsedilen farklılıklara ilaveten, bu çalışmanın temel amacı, değişik ülkelerde faaliyet gösteren farklı türdeki bankaların olası finansal performans farklılıklarını ortaya koymaktır. Bankaların performansını ampirik olarak değerlendirmek için, farklı finansal oranlar kullanılmıştir. Performans literatürünün öngördüğü, sermaye yeterliği, aktif kalitesi, yönetim, kazanç ve likidite gibi performansı etkileyen, fınansal oranlar kullanılarak performans olçülmüş ve tahmin edilen panel regresyon analizlerinin sonuçlarının değerlendirilmesi F-test ve T-test ile yapılmıştır.

Anahtar Kelimeler: Islami bankacılık; geleneksel bankacılık.

iv

ACKNOWLEDGMENTS

I would like to thank Assoc. Prof. Dr. Eralp BEKTAS for his continuous support and guidance in the preparation of this study. Without his invaluable supervision, all my efforts could have been short-sighted.

I owe extremely to my family who allowed me to travel all the way from Kazakhstan to Turkish Republic of Northern Cyprus and supported me all throughout my studies. I would like to dedicate this study to them as an indication of their significance in this study as well as in my life.

v

To my lovely wıfe and son

vi

TABLE OF CONTENTS

ABSTRACT...

References: [11] Kyriaki Kosmidou, Constantin Zopounidis, Measurement Of Bank Performance
In Greece, South-Eastern Europe Journal of Economics, 1 (2008) 79-95
2011
[21] Spathis, Kosmidou, Doumpos (2002), „Assessing profitability factors in the
McGraw-Hill (Malaysia) Sdn,Bhd, 2009.
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