The Performance of Islamic Vs. Conventional Banks: Evidence on the Suitability of the Basel Capital Ratios

Bitar, Mohammad; Hassan, M Kabir; Pukthuanthong, Kuntara; Walker, Thomas

Abstract

This paper examines the effect of various types of bank capital on the profitability and efficiency of conventional and Islamic banks. Our results show that higher quality forms of capital improve the profitability and efficiency for both systems although the results are stronger for conventional banks. The capital effect is more pronounced for large, too-big-to-fail, and highly capitalized banks. The results are robust across various subsamples, alternative profitability and efficiency measures, and different estimation techniques.

Citation

Bitar, M., Hassan, M. K., Pukthuanthong, K., & Walker, T. (2018). The Performance of Islamic Vs. Conventional Banks: Evidence on the Suitability of the Basel Capital Ratios. Open Economies Review, 29(5), 1003-1038

• Journal Article Type: Article
• Acceptance Date: Mar 6, 2018
• Online Publication Date: Apr 5, 2018
• Publication Date: Apr 5, 2018
• Deposit Date: Oct 9, 2019
• Publicly Available Date: Oct 25, 2019
• Print ISSN: 0923-7992
• Electronic ISSN: 1573-708X
• Publisher: Springer Verlag
• Peer Reviewed: Peer Reviewed
• Volume: 29
• Issue: 5
• Pages: 1003-1038
• Keywords: Bank capital; Basel capital; profitability; efficiency JEL Classification: G21; G28; P43; P47
• Public URL: https://nottingham-repository.worktribe.com/output/2791377
• Publisher URL: https://link.springer.com/article/10.1007/s11079-018-9492-1
• Contract Date: Oct 9, 2019