Journal of Behavioural Economics, Finance, Entrepreneurship, Accounting and Transport
ISSN (Print): 2376-1326 ISSN (Online): 2376-1334 Website: http://www.sciepub.com/journal/jbe Editor-in-chief: Pr. Abdelfatteh Bouri
Open Access
Journal Browser
Go
Journal of Behavioural Economics, Finance, Entrepreneurship, Accounting and Transport. 2015, 3(1), 47-56
DOI: 10.12691/jbe-3-1-6
Open AccessArticle

Credit Risk and Efficiency: Comparative Study between Islamic and Conventional Banks during the Current Crises

Afifa Ferhi1, and Ridha Chkoundali1

1Faculty of Economics and Management of Sfax, University of Sfax, Street of airport, km 4.5, LP 1088, Sfax 3018, Tunisia

Pub. Date: March 05, 2015

Cite this paper:
Afifa Ferhi and Ridha Chkoundali. Credit Risk and Efficiency: Comparative Study between Islamic and Conventional Banks during the Current Crises. Journal of Behavioural Economics, Finance, Entrepreneurship, Accounting and Transport. 2015; 3(1):47-56. doi: 10.12691/jbe-3-1-6

Abstract

This study deals with the credit risk and the efficiency of the Islamic and conventional banks in 28 countries during the current crises. For this purpose, we take a sample of 99 Islamic banks and 110 classics during the 1999-2010 period. The generalized method of moments (GMM) is applied to measure the relationship of the credit risk, capital efficiency and banking industries during the current crises. The results show that most of conventional banks have a higher credit risk than the Islamic ones. This risk has a high impact on the exposure to the financial crises. The inefficiency degree of Islamic banks does not differ from that of the conventional ones.

Keywords:
Credit risk Efficiency Islamic banks Conventional banks financial crises GMM

Creative CommonsThis work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References:

[1]  Alam, N. (2012). Efficiency and Risk-Taking in Dual Banking System: Evidence from Emerging Markets. International Review of Business Research Papers, 8 (4), 94-111.
 
[2]  Altunbas and al. (2007). “Examining the Relationships between Capital, Risk and Efficiency in European Banking”, European Financial Management, Vol. 13, No. 1, 2007, 49-70.
 
[3]  Abedifar and al. (2012). “Risk in Islamic Banking”, HAL Id: hal-00915115. https://hal-unilim.archives-ouvertes.fr/hal-00915115.
 
[4]  Arunkumar, R., &Kotreshwar, G. (2005). Risk Management in Commercial Banks (A Case Study of Public and Private Sector Banks). SSRN eLibrary.
 
[5]  Coyle, B. (2000). Framework for Credit Risk Management, Chartered Institute of Bankers, United Kingdom
 
[6]  Demsetz, Rebecca S. and Philip E. Strahan (1997). “Diversification, Size, and Risk at Bank Holding Companies,” Journal of Money, Credit and Banking 29 (3), pp. 300-13.
 
[7]  F. Fiordelisi, D. Marques-Ibanez, and P. Molyneux. Efficiency and risk in european banking. Working Paper Series 1211, European Central Bank, 2010.
 
[8]  Hughes, J.P. and Mester, L.J. (1998). Bank capitalization and cost: evidence of scale economies in risk management and signaling, Review of Economics and Statistics 80, 314-325.
 
[9]  Hughes, Joseph P., William Lang, Loretta J. Mester, and Choon-Geol Moon. ''Recovering Technologies that Account for Generalized Managerial Preferences: An Application to Non-Risk-Neutral Banks,'' Working Paper No. 95-8/R, Federal Reserve Bank of Philadelphia, September 1995.
 
[10]  Khan, T. (2003). Credit Risk Management: A Framework for Islamic Banking. Paper presented at the Islamic Banking: Risk Management, Regulation and Supervision, Jakarta, Indonesia.
 
[11]  Konishi, Masaru, and Yukihiro Yasuda, 2004, Factors Affecting Bank Risk Taking: Evidence from Japan, Journal of Banking and Finance 28, 215-232.
 
[12]  Martiana and al (2011).Operational risk in Islamic banks: examination of issues. Qualitative Research in Financial Markets, 3 (2), 131-151.
 
[13]  McNeil, A. J., Frey, R., & Embrechts, P. (2005). Quantitative Risk Management: Concepts, Techniques and Tools. Princeton: Princeton University Press.
 
[14]  Mercieca, S., K. Schaeck, and S. Wolfe, 2007, Small banks in Europe: Benefits from diversification? Journal of Banking and Finance, Vol. 31, pp. 1975-1998.
 
[15]  Morgan, Donald, and Katherine Samolyk. 2003. “Geographic Diversification in Banking and Its Implications for Bank Portfolio Choice and Performance.” Unpublished paper, Federal Reserve Bank of New York
 
[16]  Pirner, D (2003), “Risk Management v českémbankovnictví”, Bankovnictví, no. 4.
 
[17]  Srairi, S. (2009). A comparison of the profitability of Islamic and conventional banks: The case of GCC countries. Bankers, Markets & Investors, 98, 16-27.
 
[18]  Stiroh, K. J. 2004. “Diversification in Banking: Is Noninterest Income the Answer?” Journal of Money, Credit, and Banking 36, no. 5 (October): 853-82.
 
[19]  Stiroh, K.J., and A. Rumble, 2006, The dark side of diversification: The case of US financial holding companies, Journal of Banking & Finance 30: 2131-2161.
 
[20]  Van Roy P. (2003): «The Impact of the 1988 Basle Accord on bank’s capital ratios and credit risk-taking: an international study », Working Paper, European Center for Advanced Research in Economics and Statitics (ECARES)YenerMark Zandi (2009). “the Economic impact of the American Recovery and Reinvestment Act”, Janvary 21, 2009. (http://www.economy.com/mark-zandi/documents/Economic_Stimulus_House_Plan_012109.pdf)