Comparisons of Financial Performance of Islamic Banks and Conventional Banks in Bangladesh

Abstract

The study has been examined and compared the performance of Islamic and Conventional banks in Bangladesh during 2010 to 2014 by analyzing CAMEL tests standard factors such as capital adequacy, asset quality, management quality, earning ability and liquidity position. The financial data for this study have taken from the banks’ financial statements existing on the banks’ websites. A sample of 5 Islamic banks and 5 Conventional banks has been selected to measure and compare their performance. Each year the average ratios were considered. CAMEL tests which is a standard test to check the health of financial institutions was used to determine the performance of Islamic and Conventional banks. The researchers have used the t-tests to justify the data. The study has shown that statistically there is no significant difference between Islamic banks and Conventional banks based on their performance calculated by CAMEL except management quality. The management qualities and asset qualities of Conventional banks are better than that of Islamic banks. On the other hand, Capital adequacy and liquidity position of Islamic banks are better than that of Conventional banks.