Impact of COVID-19 on bank performance: a comparison between Islamic vs conventional banks in OIC countries

Purpose This paper aims to investigate the financial performance of Islamic banks compared with conventional banks in Organization of Islamic Cooperation (OIC) countries during the COVID-19 pandemic. Design/methodology/approach Using data from 230 banks across 15 OIC countries from 2016 to 2022, this study uses pooled ordinary least squares (OLS) and random effects models to assess the impact of the pandemic on bank performance. Findings The findings indicate that while the pandemic negatively impacted both Islamic and conventional banks, Islamic banks outperformed their conventional counterparts in terms of return on assets (ROA), return on equity (ROE) and Tobin’s Q. Originality/value Furthermore, the study identifies a potential channel for this outperformance, as Islamic banks outperformed conventional banks when capital adequacy ratios (CAR) are higher. Overall, the study underscores the resilience of Islamic banking during financial crises and provides insights for policymakers to enhance banking stability in OIC countries.

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Publication Details

Journal
Accounting Research Journal
Published
2025-05-15
DOI
https://doi.org/10.1108/arj-10-2024-0346
Primary Topic
Islamic Finance and Banking Studies
Type
article
Field-Weighted Citation Impact
0.00
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article

Impact of COVID-19 on bank performance: a comparison between Islamic vs conventional banks in OIC countries

M. Kabir Hassan, Rashedul Hasan, Abdulaziz Alhaddab
Accounting Research Journal
Islamic Finance and Banking Studies
article

Impact of COVID-19 on bank performance: a comparison between Islamic vs conventional banks in OIC countries

M. Kabir Hassan, Rashedul Hasan, Abdulaziz Alhaddab
article en

Abstract

Purpose This paper aims to investigate the financial performance of Islamic banks compared with conventional banks in Organization of Islamic Cooperation (OIC) countries during the COVID-19 pandemic. Design/methodology/approach Using data from 230 banks across 15 OIC countries from 2016 to 2022, this study uses pooled ordinary least squares (OLS) and random effects models to assess the impact of the pandemic on bank performance. Findings The findings indicate that while the pandemic negatively impacted both Islamic and conventional banks, Islamic banks outperformed their conventional counterparts in terms of return on assets (ROA), return on equity (ROE) and Tobin’s Q. Originality/value Furthermore, the study identifies a potential channel for this outperformance, as Islamic banks outperformed conventional banks when capital adequacy ratios (CAR) are higher. Overall, the study underscores the resilience of Islamic banking during financial crises and provides insights for policymakers to enhance banking stability in OIC countries.

Accounting Research JournalVol. 38(3-4)
Prince Sattam Bin Abdulaziz University (SA), University of New Orleans (US), Coventry University (GB)
Openalex Percentile: Top 85%
Islamic Finance and Banking Studies
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Impact of COVID-19 on bank performance: a comparison between Islamic vs conventional banks in OIC countries — M. Kabir Hassan, Rashedul Hasan, et al. · Accounting Research Journal (2025) | TGRS Research Map | TGRS