The Effects of the Global Crisis on Islamic and Conventional Banks: A Comparative Study

By Jemma Dridi, M. Hasan. Social Science Research Network, 2010

948 citations recorded by the source corpus.

This paper examines the performance of Islamic banks (IBs) and conventional banks (CBs) during the recent global crisis by examining the impact of the crisis on profitability, credit and asset growth, and external ratings in a group of countries where the two types of banks have significant market share. Our analysis suggests that IBs have been affected differently than CBs. Factors related to IBs' business model helped limit the adverse impact on profitability in 2008, while weaknesses in risk management practices in some IBs led to a larger decline in profitability in 2009 compared to CBs. IBs' credit and asset growth performed better than did that of CBs in 2008–2009, contributing to financial and economic stability. External rating agencies' re-assessment of IBs' risk was generally more favorable.

Subfields: Accounting

View Paper: https://www.semanticscholar.org/paper/0578958e9127977725c4e8d02beb66eead94cdbc

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Citations in the corpus

Geopolitical Risks and Movements in Islamic Bond and Equity Markets: A Note (2019, background): “…Southeast Asian countries host firms that account for the largest share of Islamic financial assets that have been documented to show better performance and more stability during periods of market stress (e.g. Hasan and Dridi 2010; Askari 2012; Beck, DemirgüçKunt, and Merrouche 2013; among others).”
An Overview of Islamic Finance (2015, background): “Using the results from a cross-country survey, Song and Oosthuizen (2014) show that, despite considerable progress on the legal and prudential framework of Islamic banking, 36 See Farooq and Zaheer (2015), di Mauro et al., (2013), Beck et al., (2013) and Hasan and Dridi (2011).”
The governance, risk-taking, and performance of Islamic banks (2016, positive): “Additionally, profit-loss sharing mechanisms use equity financing and risk sharing, as compared to conventional banks that use debt financing (Beck et al. 2013) and risk transference (Hasan and Dridi 2010).”
On the Sustainable Development Goals and the Role of Islamic Finance (2015, background): “Hasan and Dridi (2010) show that during the years immediately after the crisis, Islamic banks were more resilient and achieved higher credit and asset growth than conventional banks. As a result, Islamic banks were assessed more favorably by rating agencies in the post-crisis era. Beck, Demirguc-Kun”
Islamic Governance, National Governance, and Bank Risk Management and Disclosure in MENA Countries (2017, background): “In particular, MENA countries have experienced considerable political instability, especially in the form of the ‘Arab Spring’, as well as the impact of the 2007/08 credit crunch in the MENA region (Beltratti & Stulz, 2012; Hasan & Dridi, 2010).”