Performance indicators of banks in a total Islamic banking system: the case of Sudan
International Journal of Islamic and Middle Eastern Finance and Management
ISSN: 1753-8394
Article publication date: 14 June 2013
Abstract
Purpose
The purpose of this paper is to describe the common performance traits of banks operating in a whole Islamic banking system in Sudan. Sudan is among the few economies in which a whole Islamic banking system is in place.
Design/methodology/approach
Nine banks representing the most active and large banks are used as a sample for this analysis. The study applied factor analysis to a large set of financial ratios that are commonly used in financial analysis of banks.
Findings
The study found that six factors are able to explain most of the variation of the financial ratios used in the study. These factors ranked according to the percentage of variation explained are: liquidity risk, coverage, efficiency (utilization), profitability, capital adequacy, and control. The study also tested for the stability of these factors over time and found that both the extracted factors and their loadings are stable over time.
Practical implications
Thus, this study provides a reduced set of indicators of performance of Islamic banks that operate in a total Islamic banking system that may be beneficial to a large group of stakeholders and parties that have interest in Islamic banking.
Originality/value
This study provides an opportunity to interested researchers in the area of Islamic banks about an important aspect of a total Islamic banking system, such as Sudan.
Keywords
Citation
Eljelly, A.M.A. and Abdelgadir Elobeed, A. (2013), "Performance indicators of banks in a total Islamic banking system: the case of Sudan", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 6 No. 2, pp. 142-155. https://doi.org/10.1108/17538391311329833
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited