European Academic Research ISSN 2286-4822
ISSN-L 2286-4822
Impact Factor: 3.4546 (UIF)
DRJI Value : 5.9 (B+)
Article Details :
Article Name :
Stability difference in conventional and Islamic banks: Evidence from the Middle East and North African region
Author Name :
AHMED RUFAI MOHAMMAD MOHAMAD HELMI BIN HIDTHIIR, ALIAS BIN MAT NOR
Publisher :
Bridge Center
Article URL :
Abstract :
In this piece of work, we consider the financial stability difference between the interest conventional and interest-free Islamic banks. The crucial problem with the existing literature is the overdependence on the historical information to account on the stability, which could undermine Islamic free interest banks. Using a bank data of 81 sampled banks from the MENA region, we combine both accounting and market-based measurements of banking stability to determine whether conventional banks are more resilient financial tremor than Islamic banks from 2008-2016 financial year. The study found accounting stability measurements more appropriate to explain conventional banks stability better, while the market-based measure explains the stability of Islamic banks better. At large the outcome indicates that Islamic banks are not free from financial crunch, but can recover from the financial shock faster than conventional banks.
Keywords :
Banking stability; probability to default; Z-score; MENA; GMM; conventional banks; Islamic banks.

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