Key Ratios Analysis between Conventional and Islamic Banking in Bangladesh
The proliferation of banking sector is an indicator of economic growth in Bangladesh. Conventional Banks as well as the Islamic Banks significantly influence the national economy although there are a number of dissimilarities between the two banking systems. This study was carried out to identify the differences of Conventional and Islamic Banking sectors in terms of ratio analysis. A total of 10 banks in which 5 Conventional and 5 Islamic banks were selected for the study. Some key financial ratios were being used for the analysis. It is found from the study that the Conventional and Islamic Banks had much influence on the national economy as they hold the deposit of general public and invest the funds in profitable projects. The earnings per share (EPS), return on asset (ROA), return on equity (ROE) and return on capital employed (ROCE) were greater in Islamic Banks. It clearly indicates that the Islamic Banks were more profitable and performing a good job in the context of Bangladesh although people preferred Conventional Banking most.
JEL Classification Code: G 21
Chandra, P. (2008), Investment Analysis and Portfolio Management (3rd Ed.), New Delhi: Tata McGraw-Hill Publishing Company Ltd.
Chowdhury, A., Siddiqua, A., & Chowdhury, A. (2016). Relationship between Liquidity Risk and Net Interest Margin of Conventional Banks in Bangladesh. Asian Business Review, 6(3), 175-178.
Essien, E. E. (2006), Entrepreneurship Concept and Practice, uyo: Abaem Publishing Co.
Fatema, N., & Ibrahim, A. (2013). Comparative study of Profitability and Liquidity analysis of Islamic Banks in Bangladesh. Global Disclosure of Economics and Business, 2(1), 29-46. Retrieved from http://i-proclaim.my/archive/index.php/gdeb/article/view/135
Ferdous, M., & Moniruzzaman, M. (2015). An Empirical Evidence of Corporate Social Responsibility by Banking Sector based on Bangladesh. Asian Business Review, 3(4), 82-87. doi: http://dx.doi.org/10.18034/abr.v3i4.283
Gitman, L. J. (2009), Principles of Managerial Finance (12th Ed.), Pearson Education Inc. pp. 42-103.
Haque, S. (2013), “The performance of private commercial banks: a case study of Bangladesh”, IOSR Journal of Business and Management, Vol. 12, No. 1, pp.19-25.
Innocent, E. C. (2015), “The relationship between financial ratio analysis and corporate profitability: a study of selected quoted oil and gas companies in Nigeria”, European Journal of Accounting, Auditing and Financial Research, Vol. 3, No. 2, pp. 17-34.
Innocent, E. C., Mary, O. I. and Matthew, O. M. (2013), “Financial ratio analysis as a determinant of profitability in Nigerian pharmaceutical industry”, International Journal of Business and Management, Vol. 8, No. 8, pp. 107-117.
Kumbirai, M. and Webb, R. (2010), “A financial ratio analysis of Commercial Bank performance in South Africa”, African Review of Economics and Finance, Vol. 2, No. 1, pp. 30-53.
Mughal, M. K., Waleed, A. and Shah, M. B. (2015), “Comparison of Islamic and Conventional Banks’ performance”, International Journal of Research in Economics and Social Sciences, Vol. 5, No. 6, pp. 37-46.
Muhammad, H., Shah, B., Islam, Z., Waqas, M. and Khan, D. (2013), “Comparative evaluation of performance of Pakistan Tobacco Company (PTC) and Philip Morris Pakistan Limited (PMPKL) through ratio analysis”, International Journal of Management Science and Business Research, Vol. 3, No. 1, pp. 146-156.
Onakoya, A. B. and Onakoya, A. O. (2013), “The performance of Conventional and Islamic banks in the United Kingdom: A comparative analysis”, Journal of Research in Economics and International Finance, Vol.2, No. 2, pp. 29-38.
Pandey, I. M. (2010). Financial Management. (10th ed.), New Delhi: Vikas Publishing House PVT Ltd.
Rahman, M., Ahsan, M., Hossain, M., & Hoq, M. (2015). Green Banking Prospects in Bangladesh. Asian Business Review, 2(2), 59-63. doi:http://dx.doi.org/10.18034/abr.v2i2.305
Shah, M. B. (2015), “A financial ratio analysis of Hindustan Unilever Limited (HUL)”, RESEARCH HUB- International Multidisciplinary Research Journal (RHIMRJ), Vol. 2, No. 5, pp. 1-5.
Siraj, K. K. and Pillai, P. S. (2012), “Comparative study on performance of Islamic banks and Conventional banks in GCC region”, Journal of Applied Finance & Banking, Vol. 2, No. 3, pp. 123-161.
Copyright (c) 2017 Ayesha Siddiqua, A. N. M. Minhajul Haque Chowdhury, Md. Jahangir Alam Siddikee, Abu Sayed Md. Mahmudul Haque Chowdhury, Shahnaz Parvin
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.