https://www.mdu.se/

Date: Submitted 11^th of June 2019

Level: Bachelor thesis in Business Administration, 15 CR

Institution: School of Business, Society and Engineering, Mälardalen University

Authors: Johnny Giang     Yahye Mohamoud Ahmed      Omar Layth Mansi Jawad

               94/11/01            81/10/21                                  87/10/18

Title:  The financial performance of Islamic- and Commercial banks in the GCC countries

Tutor: Emre Harun Yildiz

Keywords: Islamic banking, Commercial banking, CAMEL-framework, Profitability

Research Question: Is there a significant difference in performance between Islamic- and Commercial banks during an economically stable environment?

Purpose: A comparison between two different banking systems is executed, the performance between Islamic banking and Commercial banking is compared to identify the difference in performance.

Method: We practice a quantitative approach whereas we analyze 24 banks, 12 Islamic banks and 12 Commercial banks. Seven variables are measured within the banks which are return on asset, return on equity, capital adequacy, asset quality, management quality, earnings and liquidity. They are measured via descriptive statistics, t-test and several regression analyses.

Conclusion: Commercial banks outperform the Islamic banks in the GCC region. The      Commercial banks outperform Islamic banks in five out of seven variables. The Commercial banks outperform in both return on asset and return on equity. The Commercial banks also have a stronger asset quality, management quality and earning. Islamic banks have a stronger capital adequacy and liquidity compared to the Commercial banks.