Abstract
The aim of this study is to explain the effect of the external variables on the financial performance of the Islamic and conventional banks measured by the rates of return of assets and the rates of return on equity, in addition to the earnings per stock during the period (2001-2011). To achieve the objectives of the study, some statistical procedures and E-views program are used. The data of the annual financial reports from the sample of the study are collected. The findings of the study indicated a statistical significant effect of the external variables on the performance of the conventional banks. According to Islamic banks, there was an effect of the external variables, on the financial performance. In addition, the findings showed that there were statistical significant differences in the rates of returns on assets between Islamic and conventional banks, but there were no significant statistical differences with respect to rates of return on equity, and the earnings per stock between the two kinds of banks. In light of these findings, the study has come up with some recommendations. The Islamic banks have to enhance their financial performance to be distinguished and to progress their activities. Keywords: conventional banks, Islamic Banks, External variables, financial performance JEL Classifications: G2, G21 DOI: https://doi.org/10.32479/ijefi.9521
Highlights
Islamic banks work in the banking sector in order to develop the society economically and socially
The impact of inflation on the financial performance of Islamic banks, shows the result of statistical tests that the impact is not significant, and this result is consistent with economic expectations, saying that high inflation rates and facilities have high interest rates, can positively affect the profitability of Islamic banks, especially as a large proportion The profits of Islamic banks come from investments and other traditional activities such as Murabaha operations
Discussion of the second main hypothesis: Based on the results of the previous statistical tests, it was found that there is a significant statistical effect of economic growth as measured by GDP in real prices on the financial performance represented by ROA, ROE, EPS., That the presence of growth in GDP means that the economic situation is improving, and the various economic sectors are growing well and these sectors traditional banks
Summary
Islamic banks work in the banking sector in order to develop the society economically and socially. Due to the complexity of its financial and banking relations with all other economic institutions, as well as the multiplicity of the size and type of customers benefiting from its services, so a large part of the activities of Islamic banks are affected by a range of factors and variables (internal and external), This study came to examine a set of internal variables affecting the activity and business of banks in general, and affect the financial performance in particular. The Study Problem Financial institutions face many challenges as a result of the rapid developments in the world, and because the financial performance is of great importance in financial literature and thought and its importance in economic activity. Islamic and conventional banks have not lost sight of their interest in improving their financial performance
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