Deposit Performance Analysis: A Comparison of Conventional and Islamic Banks in Bangladesh

Tasneema Khan

doi:doi:10.11648/j.ijefm.20180604.14

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Deposit Performance Analysis: A Comparison of Conventional and Islamic Banks in Bangladesh

Tasneema Khan

Published in International Journal of Economics, Finance and Management Sciences (Volume 6, Issue 4)

Received: 9 June 2018 Accepted: 26 June 2018 Published: 23 July 2018

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Abstract

Deposit is considered to be the most important source of a banks’ fund, which plays a significant role in running a banking industry. Existence and expansion of banks are mainly influenced by their ability to attract deposits from different segments of the society. Although every bank expects that flow of deposits will be sufficient and smooth, changes in economic and commercial activities make deposit management more challenging to the bank managers. As deposit is considered the life-blood of a bank, analyzing the deposit performance has become a key factor to evaluate a banks overall performance [10]. In banking industry of Bangladesh, Islamic banks are operating successfully besides other conventional banks. Although they are few in number in the industry, Islamic banks are performing well ahead in comparison with conventional banks in some respect [13]. Therefore, to evaluate the performance of both types of banking system, deposit performance has been taken as the basis of comparison. Though the deposit schemes of both types of banks are almost similar there are differences in techniques applied in the process of deposit mobilization by these two banking systems [1]. Therefore this study aims at measuring deposit performance of both types of banks in Bangladesh, comparing their position and identifying in which aspect Islamic banks are ahead of conventional banks and in which area conventional banks are performing better. For this purpose, all the Private Commercial Conventional Banks (PCCBs) and Islamic Banks (IBs) of Bangladesh have been studied for last 10 consecutive years ranging from 2007 to 2016. Using some variables like total deposit, segment wise deposit, categories of deposit, growth rates and productivity aspect, this study shows that PCCBs are ahead if total amount is measured but in terms of growth and productivity IBs show better performance. This can be considered as a very time proven and rational study since no other study concerned on such issue earlier in Bangladesh. These results would help both types of banks know their position in terms of deposit performance and thus also reflect the performance of banking sector as a whole since these two types of bank together constitute almost seventy percent of banking industry in Bangladesh.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 6, Issue 4)
DOI	10.11648/j.ijefm.20180604.14
Page(s)	165-173
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2018. Published by Science Publishing Group

Keywords

Conventional Banks, Islamic Banks, Deposit

References

[1]	Ashrafuzzaman, M. and Tanim-Ul-Islam, M. (2015). A Comparative Study of Islamic and Conventional Banking in Bangladesh: Camel Analysis. Journal of Business and Technology, 10 (1).
[2]	Al Mahmud, A. and Islam, M. M. (2011). A Comparative Study on Performance Evaluation of Conventional Banks and Islamic Banks in Bangladesh with Special Reference to Islami Bank Bangladesh Limited. Thoughts on Economics, 18(5).
[3]	Bangladesh Bank. (2006-2016). Scheduled Bank Statistics. Dhaka.
[4]	Bangladesh Bank. (2006-2016). Financial Stability Report. Dhaka.
[5]	Chakraborty, J. Salam, F. and Rabbany, Md. G. (2015). Financial Performance Analysis of Islamic Banks in Bangladesh: A Case Study on Islami Bank Bangladesh Limited (IBBL). International Journal of Economics, Finance and Management Sciences, 3(2), pp. 99-106.
[6]	Hossain, Md. S. (2015). Comparative Analysis of Financial Performance of Islamic vs. Conventional Banks in Bangladesh. Available at SSRN: https://ssrn.com/abstract=2692975or http://dx.doi.org/10.2139/ssrn.2692975
[7]	Hanif, M. (2011). Differences and Similarities in Islamic and Conventional Banking. International Journal of Business and Social Science, 2(2).
[8]	Hassan, M. and Lewis, M. (2007). Islamic Banking: An Introduction and Overview. Edward Elgar Publishing.
[9]	Hassan, M. (1999). Islamic banking in theory and practice: the experience of Bangladesh. Managerial Finance, 25(5).
[10]	Kabir, Md., Qayum, Md. and Islam, M. (2013). Efficiency in Deposit Management of Islami Bank Bangladesh Ltd and Pubali Bank Ltd: A Comparative Study. ASA University Review, 7(1).
[11]	Mahbub, M. and Dilshed, H. (2016). Analysis of Financial Performance: A Comparative Study between Private Commercial Conventional & Islamic Banks in Bangladesh. IOSR Journal of Business and Management, 18(12), pp. 58-66.
[12]	Ministry of Finance, Government of Bangladesh, (2006-2016). Activities of Banks, Insurance and Financial Institutions. Dhaka.
[13]	Mahal, I. and Rahman, B. (2013). Profitability trend in the banking sector of Bangladesh A comparative study of Islamic and conventional banks. The Bangladesh Accountant.
[14]	Noman, A. H. M., Pervin, S., Chowdhury, N. J., Hossain, Md. A., & Banna, H. (2015). Comparative Performance Analysis between Conventional and Islamic Banks in Bangladesh- An Application of Binary Logistic Regression. Asian Social Science, 11(21).
[15]	Sarker, Md. N. I., Sultana, A. and Prodhan, A. Z. M. (2017). Financial Performance Analysis of Islamic Bank in Bangladesh: A Case Study on Al-Arafah Islami Bank Limited. World Journal of Economic and Finance, 3(1), pp. 052-060.
[16]	Sarker, Md. (2013). Islamic Banking in Bangladesh: Growth, Structure, and Performance. International Journal of Islamic Financial Services, 1(3).
[17]	Yousuf, S., Islam, Md. A., Islam, Md. R. (2014). Islamic Banking Scenario of Bangladesh. Journal of Islamic Banking and Finance, 2(1).

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APA Style

Tasneema Khan. (2018). Deposit Performance Analysis: A Comparison of Conventional and Islamic Banks in Bangladesh. International Journal of Economics, Finance and Management Sciences, 6(4), 165-173. https://doi.org/10.11648/j.ijefm.20180604.14

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ACS Style

Tasneema Khan. Deposit Performance Analysis: A Comparison of Conventional and Islamic Banks in Bangladesh. Int. J. Econ. Finance Manag. Sci. 2018, 6(4), 165-173. doi: 10.11648/j.ijefm.20180604.14

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AMA Style

Tasneema Khan. Deposit Performance Analysis: A Comparison of Conventional and Islamic Banks in Bangladesh. Int J Econ Finance Manag Sci. 2018;6(4):165-173. doi: 10.11648/j.ijefm.20180604.14

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@article{10.11648/j.ijefm.20180604.14,
  author = {Tasneema Khan},
  title = {Deposit Performance Analysis: A Comparison of Conventional and Islamic Banks in Bangladesh},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {6},
  number = {4},
  pages = {165-173},
  doi = {10.11648/j.ijefm.20180604.14},
  url = {https://doi.org/10.11648/j.ijefm.20180604.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20180604.14},
  abstract = {Deposit is considered to be the most important source of a banks’ fund, which plays a significant role in running a banking industry. Existence and expansion of banks are mainly influenced by their ability to attract deposits from different segments of the society. Although every bank expects that flow of deposits will be sufficient and smooth, changes in economic and commercial activities make deposit management more challenging to the bank managers. As deposit is considered the life-blood of a bank, analyzing the deposit performance has become a key factor to evaluate a banks overall performance [10]. In banking industry of Bangladesh, Islamic banks are operating successfully besides other conventional banks. Although they are few in number in the industry, Islamic banks are performing well ahead in comparison with conventional banks in some respect [13]. Therefore, to evaluate the performance of both types of banking system, deposit performance has been taken as the basis of comparison. Though the deposit schemes of both types of banks are almost similar there are differences in techniques applied in the process of deposit mobilization by these two banking systems [1]. Therefore this study aims at measuring deposit performance of both types of banks in Bangladesh, comparing their position and identifying in which aspect Islamic banks are ahead of conventional banks and in which area conventional banks are performing better. For this purpose, all the Private Commercial Conventional Banks (PCCBs) and Islamic Banks (IBs) of Bangladesh have been studied for last 10 consecutive years ranging from 2007 to 2016. Using some variables like total deposit, segment wise deposit, categories of deposit, growth rates and productivity aspect, this study shows that PCCBs are ahead if total amount is measured but in terms of growth and productivity IBs show better performance. This can be considered as a very time proven and rational study since no other study concerned on such issue earlier in Bangladesh. These results would help both types of banks know their position in terms of deposit performance and thus also reflect the performance of banking sector as a whole since these two types of bank together constitute almost seventy percent of banking industry in Bangladesh.},
 year = {2018}
}

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TY  - JOUR
T1  - Deposit Performance Analysis: A Comparison of Conventional and Islamic Banks in Bangladesh
AU  - Tasneema Khan
Y1  - 2018/07/23
PY  - 2018
N1  - https://doi.org/10.11648/j.ijefm.20180604.14
DO  - 10.11648/j.ijefm.20180604.14
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 165
EP  - 173
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20180604.14
AB  - Deposit is considered to be the most important source of a banks’ fund, which plays a significant role in running a banking industry. Existence and expansion of banks are mainly influenced by their ability to attract deposits from different segments of the society. Although every bank expects that flow of deposits will be sufficient and smooth, changes in economic and commercial activities make deposit management more challenging to the bank managers. As deposit is considered the life-blood of a bank, analyzing the deposit performance has become a key factor to evaluate a banks overall performance [10]. In banking industry of Bangladesh, Islamic banks are operating successfully besides other conventional banks. Although they are few in number in the industry, Islamic banks are performing well ahead in comparison with conventional banks in some respect [13]. Therefore, to evaluate the performance of both types of banking system, deposit performance has been taken as the basis of comparison. Though the deposit schemes of both types of banks are almost similar there are differences in techniques applied in the process of deposit mobilization by these two banking systems [1]. Therefore this study aims at measuring deposit performance of both types of banks in Bangladesh, comparing their position and identifying in which aspect Islamic banks are ahead of conventional banks and in which area conventional banks are performing better. For this purpose, all the Private Commercial Conventional Banks (PCCBs) and Islamic Banks (IBs) of Bangladesh have been studied for last 10 consecutive years ranging from 2007 to 2016. Using some variables like total deposit, segment wise deposit, categories of deposit, growth rates and productivity aspect, this study shows that PCCBs are ahead if total amount is measured but in terms of growth and productivity IBs show better performance. This can be considered as a very time proven and rational study since no other study concerned on such issue earlier in Bangladesh. These results would help both types of banks know their position in terms of deposit performance and thus also reflect the performance of banking sector as a whole since these two types of bank together constitute almost seventy percent of banking industry in Bangladesh.
VL  - 6
IS  - 4
ER  -

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Author Information

Tasneema Khan

Department of Banking and Insurance, Faculty of Business Studies, University of Dhaka, Dhaka, Bangladesh

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APA Style

Tasneema Khan. (2018). Deposit Performance Analysis: A Comparison of Conventional and Islamic Banks in Bangladesh. International Journal of Economics, Finance and Management Sciences, 6(4), 165-173. https://doi.org/10.11648/j.ijefm.20180604.14

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ACS Style

Tasneema Khan. Deposit Performance Analysis: A Comparison of Conventional and Islamic Banks in Bangladesh. Int. J. Econ. Finance Manag. Sci. 2018, 6(4), 165-173. doi: 10.11648/j.ijefm.20180604.14

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AMA Style

Tasneema Khan. Deposit Performance Analysis: A Comparison of Conventional and Islamic Banks in Bangladesh. Int J Econ Finance Manag Sci. 2018;6(4):165-173. doi: 10.11648/j.ijefm.20180604.14

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@article{10.11648/j.ijefm.20180604.14,
  author = {Tasneema Khan},
  title = {Deposit Performance Analysis: A Comparison of Conventional and Islamic Banks in Bangladesh},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {6},
  number = {4},
  pages = {165-173},
  doi = {10.11648/j.ijefm.20180604.14},
  url = {https://doi.org/10.11648/j.ijefm.20180604.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20180604.14},
  abstract = {Deposit is considered to be the most important source of a banks’ fund, which plays a significant role in running a banking industry. Existence and expansion of banks are mainly influenced by their ability to attract deposits from different segments of the society. Although every bank expects that flow of deposits will be sufficient and smooth, changes in economic and commercial activities make deposit management more challenging to the bank managers. As deposit is considered the life-blood of a bank, analyzing the deposit performance has become a key factor to evaluate a banks overall performance [10]. In banking industry of Bangladesh, Islamic banks are operating successfully besides other conventional banks. Although they are few in number in the industry, Islamic banks are performing well ahead in comparison with conventional banks in some respect [13]. Therefore, to evaluate the performance of both types of banking system, deposit performance has been taken as the basis of comparison. Though the deposit schemes of both types of banks are almost similar there are differences in techniques applied in the process of deposit mobilization by these two banking systems [1]. Therefore this study aims at measuring deposit performance of both types of banks in Bangladesh, comparing their position and identifying in which aspect Islamic banks are ahead of conventional banks and in which area conventional banks are performing better. For this purpose, all the Private Commercial Conventional Banks (PCCBs) and Islamic Banks (IBs) of Bangladesh have been studied for last 10 consecutive years ranging from 2007 to 2016. Using some variables like total deposit, segment wise deposit, categories of deposit, growth rates and productivity aspect, this study shows that PCCBs are ahead if total amount is measured but in terms of growth and productivity IBs show better performance. This can be considered as a very time proven and rational study since no other study concerned on such issue earlier in Bangladesh. These results would help both types of banks know their position in terms of deposit performance and thus also reflect the performance of banking sector as a whole since these two types of bank together constitute almost seventy percent of banking industry in Bangladesh.},
 year = {2018}
}

Copy | Download

TY  - JOUR
T1  - Deposit Performance Analysis: A Comparison of Conventional and Islamic Banks in Bangladesh
AU  - Tasneema Khan
Y1  - 2018/07/23
PY  - 2018
N1  - https://doi.org/10.11648/j.ijefm.20180604.14
DO  - 10.11648/j.ijefm.20180604.14
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 165
EP  - 173
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20180604.14
AB  - Deposit is considered to be the most important source of a banks’ fund, which plays a significant role in running a banking industry. Existence and expansion of banks are mainly influenced by their ability to attract deposits from different segments of the society. Although every bank expects that flow of deposits will be sufficient and smooth, changes in economic and commercial activities make deposit management more challenging to the bank managers. As deposit is considered the life-blood of a bank, analyzing the deposit performance has become a key factor to evaluate a banks overall performance [10]. In banking industry of Bangladesh, Islamic banks are operating successfully besides other conventional banks. Although they are few in number in the industry, Islamic banks are performing well ahead in comparison with conventional banks in some respect [13]. Therefore, to evaluate the performance of both types of banking system, deposit performance has been taken as the basis of comparison. Though the deposit schemes of both types of banks are almost similar there are differences in techniques applied in the process of deposit mobilization by these two banking systems [1]. Therefore this study aims at measuring deposit performance of both types of banks in Bangladesh, comparing their position and identifying in which aspect Islamic banks are ahead of conventional banks and in which area conventional banks are performing better. For this purpose, all the Private Commercial Conventional Banks (PCCBs) and Islamic Banks (IBs) of Bangladesh have been studied for last 10 consecutive years ranging from 2007 to 2016. Using some variables like total deposit, segment wise deposit, categories of deposit, growth rates and productivity aspect, this study shows that PCCBs are ahead if total amount is measured but in terms of growth and productivity IBs show better performance. This can be considered as a very time proven and rational study since no other study concerned on such issue earlier in Bangladesh. These results would help both types of banks know their position in terms of deposit performance and thus also reflect the performance of banking sector as a whole since these two types of bank together constitute almost seventy percent of banking industry in Bangladesh.
VL  - 6
IS  - 4
ER  -

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