IDEAS home Printed from https://ideas.repec.org/a/ist/journl/v68y2018i2p221-241.html
   My bibliography  Save this article

Determining and Examining the Performance Index of Dual Banking System: A Panel Data Comparative Analyse for Turkey

Author

Listed:
  • Selim DEMEZ

    (Hakkari University, Faculty of Economics, Hakkari, Turkey)

  • Murat USTAOĞLU

    (Istanbul University, Faculty of Economics, Istanbul, Turkey)

  • Ahmet İNCEKARA

    (Istanbul University, Faculty of Economics, Istanbul, Turkey)

Abstract

In addition to basic financial transactions, the banks generate a variety of financial instruments and exploits the advantages associated with the globalization trend. It is not realistic to speak of an alternative that would end the domination of the interest-based conventional system in the global economy. However, Islamic banking, operating based on the profit and loss share, has become popular despite the fact that it has been introduced only some decades ago in some Muslim countries. The Islamic banking system has been in recent years compared to the conventional banking system. Measures taken in light of findings based on studies focusing on different variables and datasets will help minimize the impacts of the recessions and crises in the near future. This study analyzes the performance of three Islamic and nine conventional banks in Turkey after the 2008 global financial crisis (in the period of 2010-2015) by reliance on the panel data model. The findings in the study reveal that the conventional bank performance affects the banksize, reserves, real effective exchange rate and real interest rate whereas the impact has been greater in the case of Islamic banks upon banksize, deposit rate, reserves, market concentration, real effective exchange rate and real interest rate.

Suggested Citation

  • Selim DEMEZ & Murat USTAOĞLU & Ahmet İNCEKARA, 2018. "Determining and Examining the Performance Index of Dual Banking System: A Panel Data Comparative Analyse for Turkey," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 68(2), pages 221-241, December.
    • Handle: RePEc:ist:journl:v:68:y:2018:i:2:p:221-241
    DOI: 10.26650/ISTJECON2018-0001
    as

    Download full text from publisher

    File URL: https://cdn.istanbul.edu.tr/file/1CD58DF90A/4D3F76E11309461FBE71916C4C7A378E?doi=10.26650/ISTJECON2018-0001
    Download Restriction: no
    File URL: http://ije.istanbul.edu.tr/en/yazi/10-26650-istjecon2018-0001-6400580067007A0057004B00310041003200790067003100
    Download Restriction: no
    File URL: https://libkey.io/10.26650/ISTJECON2018-0001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Abdul Rashid & Sana Jabeen, 2016. "Analyzing performance determinants: Conventional versus Islamic Banks in Pakistan," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 16(2), pages 92-107, June.
    2. Bader, Mohammed Khaled I. & Mohamad, Shamsher & Ariff, Mohamed & Hassan, Taufiq, 2008. "Cost, Revenue, And Profit Efficiency Of Islamic Versus Conventional Banks: International Evidence Using Data Envelopment Analysis," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 15, pages 24-76.
    3. K.K. Siraj & P. Sudarsanan Pillai, 2012. "Comparative Study on Performance of Islamic Banks and Conventional Banks in GCC region," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 2(3), pages 1-6.
    4. Paul S. Mills & John R. Presley, 1999. "Islamic Finance: Theory and Practice," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-28847-8, December.
    5. Ariss, Rima Turk, 2010. "Competitive conditions in Islamic and conventional banking: A global perspective," Review of Financial Economics, Elsevier, vol. 19(3), pages 101-108, August.
    6. Asli Demirguk-Kunt & Thorsten Beck & Ouarda Merrouche, 2013. "Islamic Banking versus Conventional Banking: Business model, Efficiency, and Stability," Post-Print hal-01638080, HAL.
    7. Abdus Samad, 2004. "Performance Of Interest-Free Islamic Banks Vis-À-Vis Interest-Based Conventional Banks Of Bahrain," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 12(2), December .
    8. Demirguc-Kunt, Asli & Huizinga, Harry, 2000. "Financial structure and bank profitability," Policy Research Working Paper Series 2430, The World Bank.
    9. Iqbal, Munawar, 2001. "Islamic and Conventional Banking in the Nineties: A Comparative Study," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 8, pages 1-27.
    10. Baltensperger, Ernst, 1980. "Alternative approaches to the theory of the banking firm," Journal of Monetary Economics, Elsevier, vol. 6(1), pages 1-37, January.
    11. Mona Esam Fayed, 2013. "Comparative Performance Study of Conventional and Islamic Banking in Egypt," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 3(2), pages 1-1.
    12. Suat Teker & Dilek Teker & Oya Kent, 2011. "Measuring Commercial Banks’ Performances in Turkey: A Proposed Model," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 1(3), pages 1-7.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Achraf Haddad & Anis El Ammari & Abdelfettah Bouri, 2019. "Are the Islamic Banks Really more Profitable than the Conventional Banks in a Financial Stable Period?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(9), pages 994-1018, September.
    2. Khan Tauseef & Ahmad Waqar & Rahman Muhammad Khalil Ur & Haleem Fazal, 2018. "An Investigation of the Performance of Islamic and Interest Based Banking Evidence from Pakistan," HOLISTICA – Journal of Business and Public Administration, Sciendo, vol. 9(1), pages 81-112, May.
    3. Neifar, Malika, 2020. "Interest-free versus Conventional banks- A Comparative Study using Linear and Nonlinear Panel Regression: Empirical Evidence from Turky and 6 MENA countries," MPRA Paper 101028, University Library of Munich, Germany.
    4. Imène BERGUIGA & Philippe ADAIR, 2019. "The performance of Islamic banks in the MENA region: Are specific risks a minor attribute?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 49, pages 5-23.
    5. Mohamed Ali Trabelsi & Naama Trad, 2017. "Profitability and risk in interest-free banking industries: a dynamic panel data analysis," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing Limited, vol. 10(4), pages 454-469, October.
    6. Neifar, Malika, 2020. "Different dimensions Bank performance comparisons IBs vs CBs – Quatar case," MPRA Paper 101375, University Library of Munich, Germany.
    7. Trad, Naama & Trabelsi, Mohamed Ali & Goux, Jean François, 2017. "Risk And Profi Tability Of Islamic Banks: A Religious Deception Or An Alternative Solution?," European Research on Management and Business Economics (ERMBE), Academia Europea de Dirección y Economía de la Empresa (AEDEM), vol. 23(1), pages 40-45.
    8. Achraf Haddad & Anis El Ammari & Abdelfettah Bouri, 2019. "Are Islamic banks really more solvent than conventional banks in a financially stable period?," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 9(11), pages 346-366, November.
    9. Omneya Abdelsalam & Marwa Elnahass & Sabur Mollah, 2018. "Asset Securitization and Risk: Does Bank Type Matter?," Working Papers 2018-15, Swansea University, School of Management.
    10. Mahmoud Al-Rdaydeh & Ali Matar & Odai Alghzwai, 2017. "Analyzing the Effect of Credit and Liquidity Risks on Profitability of Conventional and Islamic Jordanian Banks," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(12), pages 1145-1155, December.
    11. Amal Alabbad & Andrea Schertler, 2022. "COVID-19 and bank performance in dual-banking countries: an empirical analysis," Journal of Business Economics, Springer, vol. 92(9), pages 1511-1557, November.
    12. Nosheen & Abdul Rashid, 2021. "Financial soundness of single versus dual banking system: explaining the role of Islamic banks," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 20(1), pages 99-127, January.
    13. Pejman Abedifar & Shahid M. Ebrahim & Philip Molyneux & Amine Tarazi, 2015. "Islamic Banking And Finance: Recent Empirical Literature And Directions For Future Research," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 637-670, September.
    14. Isaev, Mirolim & Masih, Mansur, 2017. "Macroeconomic and bank-specific determinants of different categories of non-performing financing in Islamic banks: Evidence from Malaysia," MPRA Paper 79719, University Library of Munich, Germany.
    15. Asmild, Mette & Kronborg, Dorte & Mahbub, Tasmina & Matthews, Kent, 2019. "The efficiency patterns of Islamic banks during the global financial crisis: The case of Bangladesh," The Quarterly Review of Economics and Finance, Elsevier, vol. 74(C), pages 67-74.
    16. Neifar, Malika, 2020. "Long run comparison analysis and Short run Stability sensitivity: Empirical Evidence from Tunisian Banks," MPRA Paper 101029, University Library of Munich, Germany.
    17. Sarwar Uddin Ahmed & Md. Ashikur Rahman & Samiul Parvez Ahmed & G. M. Wali Ullah, 2014. "Pricing Linkage between Islamic Banking and Conventional Banking:The Case of Bangladesh," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 3(4), pages 84-97, October.
    18. Grira, Jocelyn & Hassan, M. Kabir & Soumaré, Issouf, 2016. "Pricing beliefs: Empirical evidence from the implied cost of deposit insurance for Islamic banks," Economic Modelling, Elsevier, vol. 55(C), pages 152-168.
    19. repec:ipg:wpaper:2014-093 is not listed on IDEAS
    20. Mamoru Nagano, 2016. "Who issues Sukuk and when?: An analysis of the determinants of Islamic bond issuance," Review of Financial Economics, John Wiley & Sons, vol. 31(1), pages 45-55, November.
    21. Neifar, Malika, 2020. "Profitability and stability trade off – IBs vs CBs in Turkey – what differences ?," MPRA Paper 101376, University Library of Munich, Germany.

    More about this item

    Keywords

    Islamic Finance; conventional banks; performance index;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics

    Statistics

    Access and download statistics

    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:ist:journl:v:68:y:2018:i:2:p:221-241. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Ertugrul YASAR (email available below). General contact details of provider: https://edirc.repec.org/data/ifisttr.html .

    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.