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Pricing linkage between Islamic banking and conventional banking: The case of Bangladesh

International Journal of Finance & Banking Studies

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Title Pricing linkage between Islamic banking and conventional banking: The case of Bangladesh
 
Creator Ahmed, Sarwar Uddin; Independent University, Bangladesh
Rahman, Md. Ashikur; Independent University, Bangladesh
Ahmed, Samiul Parvez; Independent University, Bangladesh
Ullah, G. M. Wali; Independent University, Bangladesh
 
Subject Finance, Banking
Islamic banking, conventional banking, pricing, profit and loss sharing
 
Description Islamic banking is based on profit and loss mechanism where the use of interest is prohibited.  Unlike conventional banks, these banks do not charge a specific rate of interest, rather provides financing in exchange for profit sharing.  However, there are studies claiming that, in practice, Islamic banking is same as conventional banking with regard to the use of interest. It is also claimed that, Islamic deposits are not interest-free, but are closely attached to conventional deposits.   On this background, the objective of this study is to examine the relationship between pricing in Islamic banks vis-à-vis conventional banks by taking the case of Bangladesh. We have used monthly data during the period of 2009-2013. The findings of the study showed that, there is no statistically significant difference between the monthly average lending rates of Islamic banks and conventional banks. However, there is significant difference between deposit rates. The existence of causal relationship was inconclusive, and requires further analysis.
 
Publisher SSBFNET
 
Contributor —
 
Date 2014-11-03
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/359
 
Source International Journal of Finance & Banking Studies (ISSN: 2147- 4486); Vol 3, No 4 (2014): October; 84-97
2147-4486
 
Language eng
 
Relation http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/359/295