| By: |
Ghassan, Hassan B.;
Guendouz, Abdelkarim |
| Abstract: |
Several studies on the banking sector have shown that Islamic banks are more
financially robust and stable compared to conventional banks, mostly in
periods of financial crises. The aim of this research is to measure and
compare the level of stability between Islamic and conventional banks in Saudi
Arabia using quarterly data. The sample covers around two-thirds of banks
operating in the Saudi stock market, and data comprises the last global
financial crisis. The panel data model shows that Islamic banks relatively
reduce the financial stability index; meanwhile, they contribute efficiently
to enhance financial stability through the diversification of their assets.
According to our findings Riyad Bank and SAMBA positively impact the financial
stability, while Al-Rajhi bank has a positive but moderate role in enhancing
the banking stability. As well, the Saudi banking sector exhibits a weak
competitiveness which negatively impact the banking stability. Consequently,
the limited presence of Islamic banks in the Saudi banking sector menaces any
efforts to improve the financial stability. |
| Keywords: |
Islamic Banks, Financial Crisis, Financial Stability, Z-score Model, Saudi Arabia. |
| JEL: |
C12 C23 G21 G28 G33 |
| Date: |
2018–02–03 |
| URL: |
http://d.repec.org/n?u=RePEc:pra:mprapa:95900&r=all |