PERFORMANCE OF ISLAMIC BANKING AND CONVENTIONAL BANKING IN BOSNIA AND HERZEGOVINA – A COMPARATIVE STUDY

Abstract

The main objective of this study is to compare the performance of two areas of banking in Bosnia and Herzegovina, that is, Islamic and conventional banking. In order to measure the performance of two banking sectors, profitability, efficiency and liquidity measures are implemented. For the purpose of the study secondary data from both banking sectors is used. The time interval covered in the study spans from 2008 to 2020. Ratio analysis and independent sample t-test is applied in order to check the characteristics of two banking sectors. Currently, studies investigating comparative performance of these two banking sectors in BiH are rare, therefore theoretical contribution will be evident. Practically, it will help bank customers to understand how Islamic banking sector performs relative to the conventional banking sector. Also, bank managers of selected banks will be able to compare performance of their banks relative to the other banks in terms of the ratios used in the study. The limitation of the study is that in Bosnia and Herzegovina there is only one bank that operates according to Islamic banking principles, which will represent Islamic banking sector in this study.

Keywords

• islamic banking
• conventional banking
• performance
• profitability
• efficiency
• liquidity
• bih