A survival analysis of islamic and conventional banks

Vasileios Pappas, Stephen Ongena, Marwan Izzeldin , Ana-Maria Fuertes

Research output: Contribution to journalArticle

22 Citations (Scopus)
132 Downloads (Pure)

Abstract

Are Islamic banks inherently more stable than conventional banks? We address this question by applying a survival analysis based on the Cox proportional hazard model to a comprehensive sample of 421 banks in 20 Middle and Far Eastern countries from 1995 to 2010. By comparing the failure risk for both bank types, we find that Islamic banks have a significantly lower risk of failure than that of their conventional peers. This lower risk is based both unconditionally and conditionally on bank-specific (microeconomic) variables as well as macroeconomic and market structure variables. Our findings indicate that the design and implementation of early warning systems for bank failure should recognize the distinct risk profiles of the two bank types.
Original languageEnglish
Pages (from-to)221–256
JournalJournal of Financial Services Research
Volume51
Issue number2
Early online date12 Feb 2016
DOIs
Publication statusPublished - Apr 2017

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