The Financial Performance Analysis of Private Banks in Islamic Republic of Iran in Comparison with Selected Islamic Banks of Persian Gulf Region

Abstract

Banking system is of great importance in many countries. This system can provide effectiveness in the economy with the proper circulation of money and in the case of improper functioning, the activities of other economic sectors will face difficulties. Although banking without lucre has progresses in theoretical field, but competitiveness ability and its operational aspects is limited in transnational level. Many factors affect on this issue; lack of alignment with Islamic banking standards and operational rules of Basel Committee, political factors such as sanctions and contract compliance risk are challenges that have limited Iranian banking system in communication with other financial institutions and also has limited the improvement of indicators quality. This paper has conducted using a descriptive-analytical method and collecting library and documentary information, and studied the private banks performance of Islamic republic of Iran and Islamic banks of Persian Gulf region, based on CAMEL indexes. The results show that selected Islamic banks in terms of capital adequacy, credit risks, management quality index and liquidity index are in better situation compared to private banks in Iran.

Keywords

• Financial Performance
• Financial Ratios
• Islamic Banking
• CAMEL Index