Literature overview
| Authors/ years | Dependent variables | Independent variables | Methodology | Main conclusions | Analysis period | Country/region |
|---|---|---|---|---|---|---|
| Choong et al. (2012) | ROA, ROE | Liquidity, credit risk, level of capital, concentration level and size of the bank | Panel data multiple regression models | Higher credit risk will result in lower earnings and lower ROA and ROE ratios. Liquidity and concentration are relatively insignificant. Level of capital and economic conditions do not influence I&CB performance | 2006–2009 | Malaysia |
| Zeitun (2012) | ROA ROE | Bank age, equity, size, reserve/loan ratio, cost-income, foreign ownership, financial development, GDP, inflation | Cross-sectional time-series (panel data) | The bank’s equity increases CB profitability only. Cost-to-income had a negative and significant impact on I&CB’s performance. Size provides evidence of economies of scale in IB using ROE, while it is not significant for CB. Foreign ownership, the bank’s age and banking development have no effect on I&CB’s performance. GDP is positively correlated, while inflation is negatively correlated to the bank’s profitability | 2002– 2009 | GCC countries |
| Riaz and Mehar (2013) | ROE, ROA | Bank-specific (asset size, credit risk, total deposits to total assets), and macroeconomic determinants (interest rate) | Multiple regression analysis | There is a significant impact of bank specific. Variables and macroeconomic. Indicator on ROE. Credit risk and interest rate also have a significant impact on ROA | 2006–2010 | Pakistan |
| Daly and Frikha (2015) | ROA, ROE and efficiency | Bank size, diversity of income, solvency ratio, market share, government effectiveness, quality regulatory | Data envelopment analysis (DEA) | Significant impact of income diversity, bank size, solvency indicators and loans to assets on the ROE of IB. Market share, solvency indicators and net loans to total assets have significant effects on the ROE for CB Bank size is more significant concerning the ROA of IB | 2005– 2009 | Bahrain |
| Rashid and Jabeen (2016) | Financial performance index (FPI) based on CAMELS’ ratios | Bank-specific variables, macroeconomic factors and financial indicators | GLS regression | Operating efficiency, reserves and overheads are significant determinants of CB performance, whereas operating efficiency, deposits and market concentration are significant in explaining IB performance | 2006–2012 | Pakistan |
| Zarrouk et al. (2016) | ROA, ROE, net profit margin | Liquidity, risk and solvency, efficiency, assets quality, non-financing revenues average assets, cost-to-income ratio. Market capitalization and macroeconomic variables (GDP) | System-generalized method of moment (GMM) | Profitability is positively affected by banks’ cost-effectiveness, asset quality and level of capitalization. Non-financing activities allow IB to earn higher profits. IB performs better when GDP and investment are high. Similarities between determinants of profitability for both I&CB. The inflation rate, however, is negatively associated with IB profitability | 1994–2012 | MENA region |
| Matar and Eneizan (2018) | ROA | Leverage, firm size, liquidity, revenue and profitability | Regression analysis | Liquidity, profitability and revenues are positively related with ROA | 2005–2015 | Jordan |
| Muhindi and Ngaba (2018) | ROA | Descriptive survey design | There is a significant relationship between firm size and the financial performance of commercial banks | 2012– 2016 | Kenya | |
| Buallay et al. (2021) | ROA, ROE and Tobin’s Q | The integrated report index (IRI) | Cross-country analysis | IRI in CB positively affects market performance, while negatively affecting operational and financial performance. For IB, IRI negatively affects market performance, with no discernible effect on either financial or operational performance | 2012–2016 | GCC countries |
| Wahab and Roslan (2021) | ROA | Efficiency, liquidity and risk | Meta-analysis of 73 samples of past journals and published thesis | There is no significant difference of performance between I&CB. Better performance of IB in comparison to CB. IB performs better during short-term periods while the long-term is dominated by CB. IB can performs better than CB in a region with strong government initiatives and community awareness of Islamic finance | Short-term, medium-term and long-term | Pakistan, Bangladesh and Malaysia |
| El-Chaarani et al. (2022) | ROA, ROE | Capital structure ratios, liquidity ratios, financial risk ratios, profitability and macro factors | Descriptive statistics, T-test, multiple regression and 2SLS and GMM models | There is a significant difference between I&CB during the crisis of COVID-19, where CB presented a higher level of return and liquidity than IB. CB revealed a higher capacity to manage their financial risk. A high level of nonperforming loans, a high inflation rate and a high percentage of nonimportant cost have a negative impact on the financial performance of IB, mainly during the pandemic. A high level of liquidity risk increased the performance of IB banks but this impact falls sharply during the pandemic period | 2017–2020 | GCC countries |
| Junjunan et al. (2022) | ROA, ROE | Independent sample t-test | The independent sample t-test and the Mann–Whitney rank test | There were significant differences in capital adequacy ratio, nonperforming loans/nonperforming financing, ROA, ROE, operating expense to operating income and loan to deposit ratio/financing to deposit ratio for both I&CB. CB tends to have a better financial performance compared to IB during the COVID-19 pandemic | COVID-19 pandemi-c | Indonesia |
| El-Chaarani et al. (2023) | ROA, ROE | Credit risk, liquidity risk, capital structure, managerial efficiency | Multiple regressions, t-test | The COVID-19 pandemic had a negative impact on profitability, leading to an increased credit risk, while it did not significantly affect capital adequacy. Managerial efficiency, bank size and GDP had a positive and significant impact on banks’ return in both periods. Credit risk exerted a negative influence on ROE and ROA. Liquidity risk, capital adequacy and inflation did not significantly impact banks’ returns | 2018–2021 | MENA region |
| Authors/ years | Dependent variables | Independent variables | Methodology | Main conclusions | Analysis period | Country/region |
|---|---|---|---|---|---|---|
| ROA, ROE | Liquidity, credit risk, level of capital, concentration level and size of the bank | Panel data multiple regression models | Higher credit risk will result in lower earnings and lower ROA and ROE ratios. | 2006–2009 | Malaysia | |
| ROA | Bank age, equity, size, reserve/loan ratio, cost-income, foreign ownership, financial development, GDP, inflation | Cross-sectional time-series (panel data) | The bank’s equity increases CB profitability only. | 2002– 2009 | GCC countries | |
| Riaz and Mehar (2013) | ROE, ROA | Bank-specific (asset size, credit risk, total deposits to total assets), and macroeconomic determinants (interest rate) | Multiple regression analysis | There is a significant impact of bank specific. | 2006–2010 | Pakistan |
| ROA, ROE and efficiency | Bank size, diversity of income, solvency ratio, market share, government effectiveness, quality regulatory | Data envelopment analysis (DEA) | Significant impact of income diversity, bank size, solvency indicators and loans to assets on the ROE of IB. | 2005– 2009 | Bahrain | |
| Financial performance index (FPI) based on CAMELS’ ratios | Bank-specific variables, macroeconomic factors and financial indicators | GLS regression | Operating efficiency, reserves and overheads are significant determinants of CB performance, whereas operating efficiency, deposits and market concentration are significant in explaining IB performance | 2006–2012 | Pakistan | |
| ROA, ROE, net profit margin | Liquidity, risk and solvency, efficiency, assets quality, non-financing revenues average assets, cost-to-income ratio. Market capitalization and macroeconomic variables (GDP) | System-generalized method of moment (GMM) | Profitability is positively affected by banks’ cost-effectiveness, asset quality and level of capitalization. | 1994–2012 | MENA region | |
| ROA | Leverage, firm size, liquidity, revenue and profitability | Regression analysis | Liquidity, profitability and revenues are positively related with ROA | 2005–2015 | Jordan | |
| ROA | Descriptive survey design | There is a significant relationship between firm size and the financial performance of commercial banks | 2012– 2016 | Kenya | ||
| ROA, ROE and Tobin’s Q | The integrated report index (IRI) | Cross-country analysis | IRI in CB positively affects market performance, while negatively affecting operational and financial performance. | 2012–2016 | GCC countries | |
| ROA | Efficiency, liquidity and risk | Meta-analysis of 73 samples of past journals and published thesis | There is no significant difference of performance between I&CB. | Short-term, medium-term and long-term | Pakistan, Bangladesh and Malaysia | |
| ROA, ROE | Capital structure ratios, liquidity ratios, financial risk ratios, profitability and macro factors | Descriptive statistics, | There is a significant difference between I&CB during the crisis of COVID-19, where CB presented a higher level of return and liquidity than IB. | 2017–2020 | GCC countries | |
| ROA, ROE | Independent sample | The independent sample | There were significant differences in capital adequacy ratio, nonperforming loans/nonperforming financing, ROA, ROE, operating expense to operating income and loan to deposit ratio/financing to deposit ratio for both I&CB. | COVID-19 pandemi-c | Indonesia | |
| ROA, ROE | Credit risk, liquidity risk, capital structure, managerial efficiency | Multiple regressions, | The COVID-19 pandemic had a negative impact on profitability, leading to an increased credit risk, while it did not significantly affect capital adequacy. | 2018–2021 | MENA region |
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