Comparative study on the cost of engineering financial instruments between Islamic and conventional banks

Our research analyzes the cost of engineering Islamic and conventional financial instruments to determine the cost-efficiency of Islamic banks in the GCC. We conducted a primary and a secondary study in this research, focusing on structuring costs (sharia fees and legal/professional fees) and operational costs, respectively. We measured costs-efficiency by analyzing these costs between Islamic and conventional financial instruments and by comparing them between two time periods: 2007 and 2018. The research was carried out across 63 publicly listed GCC banks, consisting of conventional banks, conventional banks with Islamic windows, and Islamic banks. This pool of banks was most ideal because the GCC regions holds almost 43.7% of the global Islamic banking assets. We used weighted average test and Mann-Whitney U test (non-parametric) to perform the comparative analysis and measure cost-efficiency.

 

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  • Authors

    Mariam Syed, Noora Al-Shurafa

  • Advisor

    Fuad Farooqi