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.
Authors
- M. Kabir Hassan (ORCID: https://orcid.org/0000-0001-6274-3545)
- Rashedul Hasan (ORCID: https://orcid.org/0000-0003-0130-0665)
- Abdulaziz Alhaddab
Institutions
- Prince Sattam Bin Abdulaziz University (SA)
- University of New Orleans (US)
- Coventry University (GB)
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