Financial Performance of Islamic and Conventional Banks in Qatar: A Comparative Analysis
DOI:
https://doi.org/10.58932/MULD0010Keywords:
Financial stability, Qatar central bank, CAMELS rating system, Bank performance evaluationAbstract
The goal of bank performance evaluation is to guarantee that they efficiently utilize resources. Financial performance analysis is a critical tool for recognizing the bank's weaknesses and strengths across its numerous activities. The CAMELS technique is regarded as a supervisory tool to evaluate bank performance based on several aspects, according to the literature review. Regulators use on-site and off-site monitoring tools to assess a bank's financial stability. The CAMELS rating system encourages transparency, evolution, and change in all financial institutions. Furthermore, this method identifies the structural strengths and weaknesses of financial organizations. This study conducts a comparative analysis of Islamic and conventional banks in Qatar using the CAMELS rating scale from 2015 to 2020. We used a sample of 14 banks in Qatar, four of which were Islamic while the others were conventional. The findings indicate that Islamic banks showcase superior performance in Qatar while outperforming their conventional counterparts in many variables. However, none of the banks in Qatar could obtain a rating of 1, indicating areas of weaknesses that need to be worked on, particularly in the area of liquidity, which was a critical factor for all banks. According to this study, the Qatar Central Bank should improve the monitoring and screening of all Islamic banks in Qatar. Furthermore, it is suggested that the Qatar central bank employs the CAMELS system to track operations and field offices for banks functioning to facilitate regular access to a stable banking sector. Banks can use CAMELS to track their performance, and the necessary actions must be undertaken.
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