FINANCIAL PERFORMANCE OF ISLAMIC AND CONVENTIONAL BANKS IN SAUDI ARABIA: A COMPARATIVE STUDY

Abstract

In the current world today, there are two types of banking system exist (Islamic and conventional banking). Each of this system has its pro and cons due to its different financial investments. The aim of this study is to investigate the financial performance of Islamic and conventional banks in Saudi Arabia using measures of profitability, liquidity, risk and solvency, and efficiency. A total of 6 banks (three conventional and three Islamic) were considered over the period of 2010-2015. T-test is used to determine the significance of the difference between the two groups. The study found that Islamic banks are less profitable, more liquid, less risky, and more efficient during 2010-2015.