Islamic Banking and the Credit Crunch

17 Pages Posted: 24 Mar 2010

Date Written: September 1, 2009


This paper investigates the effects that the credit crunch has had on the normal differences of Gulf Co-operation Council (GCC) Islamic banks relative to their peers for the period 2000 - 2008. Using the Two-sample t-test with unequal variances, nine ratios for 76 banks are studied to compare measures of liquidity, credit risk, profitability, and efficiency. It suggests that even though conventional banks were statistically more profitable and efficient with superior liquidity risk status during normal economic circumstances, it has been evident that the credit crunch has brought them at par with Islamic banks recording better profitability figures, while they have increased their superiority in terms of credit risk.

Keywords: Credit Crunch, Banks, Comparative performance, GCC, Islamic Banking

JEL Classification: G01, G20, G21, Y40

Suggested Citation

Dahduli, Mahmoud S., Islamic Banking and the Credit Crunch (September 1, 2009). Available at SSRN: or

Mahmoud S. Dahduli (Contact Author)

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom
+447817899451 (Phone)

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