IDEAS home Printed from https://ideas.repec.org/a/ids/ijfsmg/v7y2014i2p139-157.html
   My bibliography  Save this article

Credit and investment risk: a comparative analysis of conventional and Islamic banks

Author

Listed:
  • Md. Ariful Islam
  • Mahmudul Hasan Siddiqui
  • Salahuddin Yousuf
  • Md. Rayhan Islam

Abstract

For a developing country such as Bangladesh, the banking system is one of the most important preconditions to achieve economic development. This study covers a five-year period (2007-2011) and includes ten sample banks from the Islamic and conventional banking sectors to study the credit/investment risk of the two streams of banking. For this study, two portfolios of the two streams of banking have been constructed to perform an analysis and for document finding in the form of sector averages. Analysis revealed that return on assets of conventional banks is better than that of Islamic banks. Non-performing loans of conventional banks are significantly higher than those of Islamic banks for the period from 2007 to 2011, which indicates conventional banks' inefficiency in credit risk management. Therefore, this study concludes that in managing credit risk, some indicators support better performance of conventional banks, but some refute the claim. With proper guidelines and cautious operations, both the banking streams can mitigate their credit/investment risk.

Suggested Citation

  • Md. Ariful Islam & Mahmudul Hasan Siddiqui & Salahuddin Yousuf & Md. Rayhan Islam, 2014. "Credit and investment risk: a comparative analysis of conventional and Islamic banks," International Journal of Financial Services Management, Inderscience Enterprises Ltd, vol. 7(2), pages 139-157.
    • Handle: RePEc:ids:ijfsmg:v:7:y:2014:i:2:p:139-157
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=63956
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    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:ids:ijfsmg:v:7:y:2014:i:2:p:139-157. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=76 .

    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.