Islamic vs. Conventional Banking : Business Model, Efficiency and Stability

Beck, Thorsten; Demirgüç-Kunt, Asli; Merrouche, Ouarda

dc.creator	Beck, Thorsten
dc.creator	Demirgüç-Kunt, Asli
dc.creator	Merrouche, Ouarda
dc.date	2012-03-19T18:42:21Z
dc.date	2012-03-19T18:42:21Z
dc.date	2010-10-01
dc.date.accessioned	2023-02-17T21:06:08Z
dc.date.available	2023-02-17T21:06:08Z
dc.identifier	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20101018092550
dc.identifier	http://hdl.handle.net/10986/3929
dc.identifier.uri	http://localhost:8080/xmlui/handle/CUHPOERS/244899
dc.description	This paper discusses Islamic banking products and interprets them in the context of financial intermediation theory. Anecdotal evidence shows that many of the conventional products can be redrafted as Sharia-compliant products, so that the differences are smaller than expected. Comparing conventional and Islamic banks and controlling for other bank and country characteristics, the authors find few significant differences in business orientation, efficiency, asset quality, or stability. While Islamic banks seem more cost-effective than conventional banks in a broad cross-country sample, this finding reverses in a sample of countries with both Islamic and conventional banks. However, conventional banks that operate in countries with a higher market share of Islamic banks are more cost-effective but less stable. There is also consistent evidence of higher capitalization of Islamic banks and this capital cushion plus higher liquidity reserves explains the relatively better performance of Islamic banks during the recent crisis.
dc.language	English
dc.relation	Policy Research Working Paper ; No. 5446
dc.rights	CC BY 3.0 IGO
dc.rights	http://creativecommons.org/licenses/by/3.0/igo/
dc.rights	World Bank
dc.subject	ACCOUNTING
dc.subject	ADVERSE SELECTION
dc.subject	AGENCY PROBLEMS
dc.subject	AGENCY RELATIONSHIPS
dc.subject	AMOUNT OF CAPITAL
dc.subject	ASSET QUALITY
dc.subject	ASSET RATIO
dc.subject	ASSET RATIOS
dc.subject	ASSETS RATIO
dc.subject	ASSETS RATIOS
dc.subject	BALANCE SHEET
dc.subject	BALANCE SHEETS
dc.subject	BANK ACTIVITIES
dc.subject	BANK ACTIVITY
dc.subject	BANK CREDIT
dc.subject	BANK HOLDING
dc.subject	BANK HOLDING COMPANY
dc.subject	BANK INDONESIA
dc.subject	BANK INSOLVENCY
dc.subject	BANK REGULATION
dc.subject	BANK RUNS
dc.subject	BANKING FEE
dc.subject	BANKING ASSETS
dc.subject	BANKING ASSOCIATIONS
dc.subject	BANKING MARKET
dc.subject	BANKING SECTOR
dc.subject	BANKING SECTOR ASSETS
dc.subject	BANKING SYSTEM
dc.subject	BANKING SYSTEMS
dc.subject	BANKS
dc.subject	BORROWER
dc.subject	CAPITAL REGULATION
dc.subject	CAPITALIZATION
dc.subject	CASE OF DEFAULT
dc.subject	CERTIFICATES OF DEPOSIT
dc.subject	CHECKS
dc.subject	COMPETITIVE MARKETS
dc.subject	CONTAGION
dc.subject	CONVENTIONAL BANK
dc.subject	CONVENTIONAL BANKING
dc.subject	CONVENTIONAL BANKS
dc.subject	COST-EFFICIENCY
dc.subject	COUNTRY COMPARISONS
dc.subject	DEBT
dc.subject	DEBT CONTRACT
dc.subject	DEBT CONTRACTS
dc.subject	DEGREE OF RISK
dc.subject	DEMAND DEPOSITS
dc.subject	DEPENDENT
dc.subject	DEPOSIT
dc.subject	DEPOSIT INSURANCE
dc.subject	DEPOSITOR
dc.subject	DEPOSITORS
dc.subject	DEPOSITS
dc.subject	DERIVATIVE
dc.subject	DERIVATIVE PRODUCTS
dc.subject	EARNING ASSETS
dc.subject	EARNINGS
dc.subject	ECONOMIC DEVELOPMENT
dc.subject	ECONOMIC GROWTH
dc.subject	ECONOMICS
dc.subject	ENTREPRENEUR
dc.subject	ENTREPRENEURS
dc.subject	EQUITY CAPITAL
dc.subject	EQUITY PARTICIPATION
dc.subject	FEE INCOME
dc.subject	FINANCIAL CRISIS
dc.subject	FINANCIAL DEVELOPMENT
dc.subject	FINANCIAL FRAGILITY
dc.subject	FINANCIAL INFORMATION
dc.subject	FINANCIAL INSTITUTIONS
dc.subject	FINANCIAL INTERMEDIARY
dc.subject	FINANCIAL INTERMEDIATION
dc.subject	FINANCIAL INTERMEDIATION THEORY
dc.subject	FINANCIAL MARKET
dc.subject	FINANCIAL PRODUCTS
dc.subject	FINANCIAL RISK
dc.subject	FINANCIAL SERVICE
dc.subject	FINANCIAL SERVICES
dc.subject	FINANCIAL SHOCKS
dc.subject	FINANCIAL STABILITY
dc.subject	FINANCIAL STATEMENT
dc.subject	FINANCIAL STATEMENTS
dc.subject	FINANCIAL SYSTEM
dc.subject	FINANCIAL SYSTEMS
dc.subject	FINANCIAL TRANSACTIONS
dc.subject	FIXED ASSET
dc.subject	FIXED ASSETS
dc.subject	FIXED RATE
dc.subject	FOREIGN BANK
dc.subject	FOREIGN BANKS
dc.subject	FOREIGN OWNERSHIP
dc.subject	GOVERNMENT INTERVENTIONS
dc.subject	GOVERNMENT INVOLVEMENT
dc.subject	GOVERNMENT OWNERSHIP
dc.subject	GROSS REVENUES
dc.subject	HOLDINGS
dc.subject	HOST COUNTRY
dc.subject	INCOME STATEMENT
dc.subject	INCOME STATEMENTS
dc.subject	INFORMATION ASYMMETRIES
dc.subject	INSOLVENCY RISK
dc.subject	INSOLVENT
dc.subject	INSTRUMENT
dc.subject	INTEREST PAYMENT
dc.subject	INTEREST PAYMENTS
dc.subject	INTEREST RATE
dc.subject	INTEREST RATE PAYMENTS
dc.subject	INTEREST RATE RISK
dc.subject	INTERNATIONAL BANK
dc.subject	INTERNATIONAL BANKS
dc.subject	INVESTMENT BANK
dc.subject	INVESTMENT DECISIONS
dc.subject	INVESTMENT PURPOSES
dc.subject	ISLAMIC BANK
dc.subject	ISLAMIC BANKING
dc.subject	ISLAMIC BANKS
dc.subject	ISLAMIC FINANCE
dc.subject	ISLAMIC MARKET
dc.subject	ISLAMIC SCHOLARS
dc.subject	LEGAL FRAMEWORK
dc.subject	LEGAL SYSTEM
dc.subject	LENDER
dc.subject	LEVERAGE
dc.subject	LIABILITY
dc.subject	LIMITED LIABILITY
dc.subject	LIQUID ASSETS
dc.subject	LIQUIDITY
dc.subject	LIQUIDITY CREATION
dc.subject	LIQUIDITY RATIO
dc.subject	LIQUIDITY RISK
dc.subject	LOAN
dc.subject	LOAN CONTRACTS
dc.subject	LOAN LOSS
dc.subject	LOAN LOSS PROVISIONS
dc.subject	LOAN LOSSES
dc.subject	LOAN-TO-DEPOSIT RATIO
dc.subject	LONG-TERM LOANS
dc.subject	MACROECONOMIC VARIABLES
dc.subject	MARKET DISCIPLINE
dc.subject	MARKET SHARE
dc.subject	MARKET SHARES
dc.subject	MARKET STRUCTURE
dc.subject	MATURITY
dc.subject	MATURITY MATCHING
dc.subject	MATURITY MISMATCH
dc.subject	MEASURES OF PROFITABILITY
dc.subject	MERGERS
dc.subject	MICROFINANCE
dc.subject	MONETARY FUND
dc.subject	MONEY LENDING
dc.subject	MORAL HAZARD
dc.subject	NET INTEREST MARGIN
dc.subject	NON-PERFORMING LOANS
dc.subject	NONPERFORMING LOANS
dc.subject	NUMBER OF BANKS
dc.subject	OPERATING COSTS
dc.subject	OPERATING INCOME
dc.subject	OPERATING LEASES
dc.subject	OPERATIONAL RISK
dc.subject	OPPORTUNITY COSTS
dc.subject	OPTIMAL CONTRACTS
dc.subject	OUTREACH
dc.subject	OVERHEAD COST
dc.subject	OVERHEAD COSTS
dc.subject	OWNERSHIP STRUCTURE
dc.subject	POLITICAL ECONOMY
dc.subject	PRIVATE CREDIT
dc.subject	PROBABILITY OF INSOLVENCY
dc.subject	PROFIT MARGIN
dc.subject	PROMISSORY NOTES
dc.subject	PRUDENTIAL REGULATIONS
dc.subject	PUBLIC POLICY
dc.subject	REAL ESTATE
dc.subject	RECOVERY PERIOD
dc.subject	RESERVES
dc.subject	RETURN
dc.subject	RETURN ON ASSETS
dc.subject	RETURN ON EQUITY
dc.subject	RETURNS
dc.subject	RIBA
dc.subject	RISK MANAGEMENT
dc.subject	RISK MANAGEMENT TOOL
dc.subject	RISK SHARING
dc.subject	RISK TAKING
dc.subject	RISK-SHARING ARRANGEMENTS
dc.subject	SAVINGS
dc.subject	SAVINGS DEPOSITS
dc.subject	SECURITIES
dc.subject	STOCK MARKET
dc.subject	STOCK RETURN
dc.subject	STOCK RETURNS
dc.subject	STOCKS
dc.subject	SUBSIDIARIES
dc.subject	SUPERVISORY AUTHORITIES
dc.subject	SUPERVISORY FRAMEWORK
dc.subject	SUPERVISORY POWER
dc.subject	SUPERVISORY POWERS
dc.subject	TRADING
dc.subject	TRADITIONAL LOAN
dc.subject	TRANSACTION
dc.subject	TRANSACTION COSTS
dc.subject	WHOLESALE FUNDING
dc.subject	WITHDRAWAL
dc.title	Islamic vs. Conventional Banking : Business Model, Efficiency and Stability
dc.type	Publications & Research :: Policy Research Working Paper