Bewertung des Arabian Journal of Business and Management

Banks Performance in KSA during Financial Distress: A Comparative Study Islamic and Conventional Banks

Abstract

Fatma Zehri and Noura Ben Mbarek

This paper compares the relative performance of Islamic and conventional banks, during the last financial crisis in Saudi Arabia. It aims to test whether one bank type is better positioned to withstand large exogenous financial shocks. Bank performance will be measured by 9 profitability, efficiency and risk accounting ratios. Data is gathered from the financial statements of 11 biggest Saudi banks (7 conventional banks and 4 Islamic banks), over the period 2005-2014. A Panel Logit Regression (PLS) is conducted on 110 bank-year observations. Our results show that the Islamic financial system has better resisted to crisis than the conventional one and bring more evidence on the effectiveness of the Islamic financial system during periods of crisis.