Islamic and Conventional Banking in the Nineties: A Comparative Study

Abstract

There is a serious lack of empirical studies on Islamic banking. This paper attempts to fill that gap to some extent. Using data for the 1990-98 period, several hypotheses and common perceptions about the practice of Islamic banking have been tested. The performance of Islamic banks has been evaluated using both trend and ratio analyses. For this purpose, some objective “benchmarks” for various ratios have been developed for the first time. The performance of Islamic banks has also been compared with a ‘control group’ of conventional banks. It has been found that in general Islamic banks have done fairly well during the period under study.