Comparative Analysis of Islamic and Conventional Banks: A Case study from Malaysia

Abstract

The aim of this study is to analyze and compare the financial performance of Islamic and conventional banks from Malaysia. For this purpose, 5 Islamic and 5 conventional banks in Malaysia are selected for the time period of 5 years from 2009 to 2013. For comparing financial performance, internal factors such as financial ratios are choosing. These financial ratios named as profitability, liquidity and credit risk with Bank-0-Meter model to calculate solvency. Statistical tools such as T-test and F-test are used to analyze the data. F test for comparing sample variance and T test for comparing sample means. Findings suggest that in terms of profitability and credit risk, conventional banks are in leading position and in terms of liquidity; Islamic banks are in leading position. But if see the result closely the difference in profitability and solvency is not significantly higher.