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The Determinants of Islamic and Conventional Banks Profitability in the GCC Region

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  • Bassam Omar Ali Jaara
  • Mohammad A. AL-Dahiyat
  • Ismail AL-Takryty

Abstract

The purpose of this study is to examine the factors affecting the profitability levels of commercial banks whether Islamic and non-Islamic over the period 2000-2018, to suggest ways to enhance the Islamic and non-Islamic banks profitability levels¡¯ in the GCC countries. This research employed Bivariate analysis and panel regression in the investigation process. The study employed return on assets ratio as a proxy for banks profitability. The study found out that conventional banks are more efficient than Islamic banks in terms of profitability levels. There are substantial variances between both Islamic and conventional banks in terms of the determinants of banks' profitability. It is found that 89% of the Islamic bank¡¯s profitability and 85% of conventional banks profitability influenced by bank size, market to book value, capital ratio, cash to assets, gross domestic product GDP, GDP growth, and inflation.

Suggested Citation

  • Bassam Omar Ali Jaara & Mohammad A. AL-Dahiyat & Ismail AL-Takryty, 2021. "The Determinants of Islamic and Conventional Banks Profitability in the GCC Region," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(3), pages 78-91, May.
    • Handle: RePEc:jfr:ijfr11:v:12:y:2021:i:3:p:78-91
    DOI: 10.5430/ijfr.v12n3p78
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    References listed on IDEAS

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    1. Sayyed Sadaqat Hussain Shah & Ștefan Cristian Gherghina & Rui Miguel Dantas & Saliha Rafaqat & Anabela Batista Correia & Mário Nuno Mata, 2023. "The Impact of COVID-19 Pandemic on Islamic and Conventional Banks’ Profitability," Economies, MDPI, vol. 11(4), pages 1-17, March.

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