ISSN: 1019-7044
Volume XLVIII, Nos. 3 & 4, September & December 2023
Published: July 2024
Pages: 70-97
Tofayel Ahmed
Every component of the global banking system has suffered serious harm due to COVID-19, and Bangladesh is no exception. As a result, its financial stability and profitability have suffered. In this study, we investigate the resiliency and profitability of Islamic banks as compared to conventional banks in Bangladesh due to the adverse impact of COVID-19. The study uses balanced panel data of 26 listed banks in Bangladesh, of which 20 conventional banks and 6 Islamic banks for 2012-2021. The study employs the Z-score to measure bank stability and Return on Asset (ROA) as a profitability measure. The study employs a random effect model for the estimation of the models. Also, it uses panel-corrected standard errors to verify the robustness of the estimation obtained from the initial random-effect model. According to the empirical results of this study, first, it cannot be said that COVID has a greater impact on the resilience of Islamic banks than conventional banks. Moreover, it cannot be concluded that Islamic banks are more profitable than traditional banks during COVID-19 Finally, the results also show that higher Capital Adequacy Ratios (CAR) and Return on Assets (ROA) had a favorable impact on resiliency. In contrast, a greater Cost to Income Ratio (CIR) indicates worse profitability due to COVID-19. Information from this study is useful to investors, regulators, and bank executives, particularly during times of crises and pandemics. JEL Classification: G21
JEL Classification:
Keywords: Resiliency , Profitability , COVID Period , Islamic Banks , Random Effect Model , Panel Corrected Standard Errors
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