Islamic and conventional banking in the nineties: a comparative study

It is felt that there is a serious lack of empirical studies on Islamic banking. This paper attempts to fill that gap to some extent. This paper uses data for the period 1990-98 to test some hypotheses and common perceptions about Islamic banking. Both trend and ratio analyses have been used in this evaluation of Islamic banks. Some new objective 'benchmarks' for various ratios have also been developed for this purpose. In addition, a 'control group' of conventional banks was used to compare the performance of Islamic banks to that of conventional banks. It has been found that on the whole, Islamic banks have done well during the period under study.