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LIQUIDITY, PROFITABILITY AND SOLVENCY OF UAE BANKS: A COMPARATIVE STUDY OF COMMERCIAL AND ISLAMIC BANKS

Jan 07, 2018

DOI:

Published in: Academy of Accounting and Financial Studies Journal

Publisher: Science Direct

/ Mosab Tabash / Hassan Ismail

The present study aims to measure and evaluate the liquidity, profitability and solvency of Islamic and commercial banks in the United Arab Emirates (UAE). The study has used a sample of all fully-fledged Islamic banks and 14 commercial banks working in the UAE over the period of 2011-2014. Panel balanced data is fetched from different sources for Islamic banks and commercial banks in the UAE. Microsoft Excel, Eviews version 7 and SPSS version 22 have been used for the analysis of the data. The liquidity, profitability and solvency ratios of the UAE Islamic and commercial banks‟ are calculated and compared over the mentioned period. The results of the study revealed that there is a significant difference between Islamic banks and commercial banks of UAE in terms of Liquidity. The study found that Islamic banks have maintained sound liquidity ratios while profitability and capital adequacy ratios are good for commercial banks of UAE. The results also show that there is a significant difference in the profitability between Islamic and commercial banks of UAE. Further, there is no significant difference found in liquidity and solvency for Islamic and commercial banks of UAE. The results of stepwise regression analysis indicate that liquidity is a determinant variable in the profitability of Islamic banks while liquidity and capital adequacy are determinant variables in the profitability of commercial banks of UAE.

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