Comparative Financial Analysis of Conventional and Islamic Banks of Developing Countries

Abstract

This study investigated the financial performance of Bangladesh's State-Owned Commercial Banks, Islami Shariah Based Private commercial Banks and Conventional Private Commercial Banks over 12 years from 2006 to 2017. The objective of this study is to find out the financial performance of a bank based on CAMEL indicators. The finding of this study is that Islami Shariah Based Private commercial Banks and Conventional Private Commercial Banks has a good position than State-Owned Commercial Banks. Specific, Pubali Bank Limited, Standard Bank Limited, Prime Bank Limited, City Bank Limited and Al-Arafah Islami Bank Limited are in the best position in Bangladesh under this study. We also found that the performance of State-Owned Commercial Banks is not good. This study gives a policy implementation according to results. 1. State-Owned Commercial Banks should restructure the infrastructure. 2. It needs more emphasis on efficiency and effectiveness to control the cost and loan investment. 3. It will be required to pay more in insurance premiums. 4. It should be born in mine, for higher rating banks. We suggest to a higher number of rating banks that it’s hinders a bank's ability to expand by investing, consolidating, or adding more branches. We also suggest to all lower rating banks. The institutions with a poor rating will be required to pay more in insurance premiums.