Authors :
Mohammad Enayet Hossain; Khan Md Abdus Subhan
Volume/Issue :
Volume 7 - 2022, Issue 7 - July
Google Scholar :
https://bit.ly/3IIfn9N
Scribd :
https://bit.ly/3BPdFDB
DOI :
https://doi.org/10.5281/zenodo.6968984
Abstract :
Islamic banking is a nascent branch of banking
and finance that has grown in importance in many
Muslim countries. One of the countries that has embraced
a dual banking system is Bangladesh. Traditional banks
borrow money at a low interest rate from depositors and
lend it to borrowers at a higher rate. On the other hand,
interest is prohibited, hence Islamic banks enter into
profit-sharing agreements with both depositors and
borrowers. The purpose of this research is to examine if
different banking arrangements based on different
ideologies result in different outcomes. This study largely
relies on secondary data because banks' refusal to disclose
green data makes it difficult to do thorough and accurate
comparisons. However, two heads of sustainable banking
departments from conventional banks and two from
Islamic banks have been interviewed in order to assess the
authenticity and trustworthiness of secondary data.
According to the study, Islamic banks that do not charge
interest outperform conventional banks that do in terms
of production, efficiency, and commitment to the local
economy and community. Nevertheless, in terms of
promoting business, profitability, liquidity, and solvency,
interest-free Islamic banks perform better than interestbased conventional banks. That is, when it comes to
financial performance, Islamic banks beat traditional,
interest-based banks.
Keywords :
Islamic Banking, Conventional Bank, Financial Performance
Islamic banking is a nascent branch of banking
and finance that has grown in importance in many
Muslim countries. One of the countries that has embraced
a dual banking system is Bangladesh. Traditional banks
borrow money at a low interest rate from depositors and
lend it to borrowers at a higher rate. On the other hand,
interest is prohibited, hence Islamic banks enter into
profit-sharing agreements with both depositors and
borrowers. The purpose of this research is to examine if
different banking arrangements based on different
ideologies result in different outcomes. This study largely
relies on secondary data because banks' refusal to disclose
green data makes it difficult to do thorough and accurate
comparisons. However, two heads of sustainable banking
departments from conventional banks and two from
Islamic banks have been interviewed in order to assess the
authenticity and trustworthiness of secondary data.
According to the study, Islamic banks that do not charge
interest outperform conventional banks that do in terms
of production, efficiency, and commitment to the local
economy and community. Nevertheless, in terms of
promoting business, profitability, liquidity, and solvency,
interest-free Islamic banks perform better than interestbased conventional banks. That is, when it comes to
financial performance, Islamic banks beat traditional,
interest-based banks.
Keywords :
Islamic Banking, Conventional Bank, Financial Performance
