Abstract
The purpose of this study is to examine the factors affecting the profitability levels of commercial banks whether Islamic and non-Islamic over the period 2000-2018, to suggest ways to enhance the Islamic and non-Islamic banks profitability levels’ in the GCC countries. This research employed Bivariate analysis and panel regression in the investigation process. The study employed return on assets ratio as a proxy for banks profitability. The study found out that conventional banks are more efficient than Islamic banks in terms of profitability levels. There are substantial variances between both Islamic and conventional banks in terms of the determinants of banks' profitability. It is found that 89% of the Islamic bank’s profitability and 85% of conventional banks profitability influenced by bank size, market to book value, capital ratio, cash to assets, gross domestic product GDP, GDP growth, and inflation.
Highlights
Islamic bank's funding tools were established to achieve the same financial purposes as conventional banks' funding tools but within the principles of Islamic sharia rules
Nur et al (2018) employed panel regression on 16 Malaysian Islamic banks during 2010-2016.The researcher employed return on assets (ROA) to proxy the financial performance, the findings revealed that the liquidity levels and assets management ratio has a positive influence on the bank's performance, whereas capital adequacy revealed an insignificant impact on the Islamic bank's financial performance
Since conventional banks showed a better return on assets than Islamic banks, these findings revealed the effectiveness of conventional banks to manage their assets efficiently compared to the Islamic banking system
Summary
Islamic bank's funding tools were established to achieve the same financial purposes as conventional banks' funding tools but within the principles of Islamic sharia rules. Islamic laws prevent Muslims carry out the financial transactions on the interest rate, but it does not prohibit capital gain (Miah et al 2018). This role has revealed the significance of examining the factors affecting the profitability levels of Islamic and non-Islamic commercial banks. This section explores the determinants of Islamic and non-Islamic commercial banks' profitability by examining several variables during the period 2000-2018. Several controlling variables are significant for examining the profitability determinants of Islamic and conventional banks'. The macroeconomic controlling variables, such as; the GDP annual growth rate, (GDP) and the annual inflation rate
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