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Competition And Other External Determinants Of The Profitability Of Islamic Banks

Author

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  • HARON, SUDIN

    (Department of Accounting and Financial Management,)

Abstract

In most of the Muslim countries, Islamic banks are operating side by side with conventional banks. This study examines the effects of competition and some other external factors on the profitability of Islamic banks. The banks chosen for this study were divided into two groups according to the market in which they operate. The study finds that Islamic banks in competitive market earned more than those which operate in a monopolistic market. Evidence was also found to support the hypothesis that the profit-loss sharing principle practiced by Islamic banks is beneficial to both depositors and the banks.

Suggested Citation

  • Haron, Sudin, 1996. "Competition And Other External Determinants Of The Profitability Of Islamic Banks," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 4, pages 49-64.
  • Handle: RePEc:ris:isecst:0101
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    References listed on IDEAS

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    1. Mullineaux, Donald J, 1978. "Economies of Scale and Organizational Efficiency in Banking: A Profit-Function Approach," Journal of Finance, American Finance Association, vol. 33(1), pages 259-280, March.
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    6. Lindley, James T. & Verbrugge, James A. & McNulty, James E. & Gup, Benton E., 1992. "Investment policy, financing policy, and performance characteristics of de novo savings and loan associations," Journal of Banking & Finance, Elsevier, vol. 16(2), pages 313-330, April.
    7. Sam Peltzman, 1968. "Bank Stock Prices and the Effects of Regulation of the Banking Structure," The Journal of Business, University of Chicago Press, vol. 41, pages 413-413.
    8. Rhoades, Stephen A., 1980. "Entry and competition in banking," Journal of Banking & Finance, Elsevier, vol. 4(2), pages 143-150, June.
    9. Kwast, Myron L. & Rose, John T., 1982. "Pricing, operating efficiency, and profitability among large commercial banks," Journal of Banking & Finance, Elsevier, vol. 6(2), pages 233-254, June.
    10. Short, Brock K., 1979. "The relation between commercial bank profit rates and banking concentration in Canada, Western Europe, and Japan," Journal of Banking & Finance, Elsevier, vol. 3(3), pages 209-219, September.
    11. Ahmad, Ziauddin, 1994. "Islamic Banking: State Of The Art," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 2, pages 1-33.
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    Cited by:

    1. Sakarya, Burchan, 2016. "Financial Stability of Islamic (Participation) Banks in Turkey," MPRA Paper 69451, University Library of Munich, Germany.
    2. 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.
    3. Jean-Michel Sahut & Mehdi Mili & Maroua Ben Krir & Frédéric Teulon, 2015. "Factors of Competitiveness of Islamic Banks in the New Financial Order," Working Papers 2015-625, Department of Research, Ipag Business School.
    4. repec:ipg:wpaper:2014-093 is not listed on IDEAS
    5. Jean Yves MOISSERON & Bruno Laurent MOSCHETTO & Frédéric TEULON, 2014. "Islamic finance: a review of the literature," Working Papers 2014-93, Department of Research, Ipag Business School.

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