Comparative Analysis of the Financial and Structural Indicators of Islamic Banks by Country
Chapter from the book:
Şahin,
C.
(ed.)
2025.
Theoretical and Applied Research in Finance.
Synopsis
This study comparatively examines the financial and structural indicators of Islamic banks operating in Türkiye, Indonesia, the United Arab Emirates, Saudi Arabia, Pakistan, Jordan, Kuwait, and Malaysia during the period 2014–2023. The analysis considers financial measures such as profitability (ROA, ROE), capital adequacy (CAR), cost efficiency (C/I), liquidity (LAR), non-performing financing (NNPF/C), foreign exchange position (NFEOP/C), sukuk portfolio (VSHV/C), as well as structural indicators including the number of banks, branches, ATMs, and employees. The findings reveal that although Islamic banks operate within a common framework of principles, their performance and risk profiles differ across countries. The study first evaluates the financial and structural indicators of Islamic banks in each country separately and then compares the ten-year averages. The results show that in terms of profitability, Saudi Arabia and Pakistan stand out, while Turkey has demonstrated remarkable growth in recent years. In contrast, Kuwait and Malaysia exhibit relatively low profitability ratios. Capital adequacy has remained above international standards in all countries, confirming the sector’s financial resilience. In terms of efficiency, Kuwait and Türkiye show strong performance, whereas Indonesia lags behind due to its high cost structure. Regarding risk management, Saudi Arabia demonstrates strength, while the UAE and Indonesia appear more vulnerable. The significant size of sukuk investments in Pakistan, Türkiye, and Malaysia indicates the integration of Islamic banks into capital markets. Structurally, Türkiye and Pakistan have expanded in terms of employment and branches, whereas Indonesia and the UAE have experienced branch reductions due to digitalization.
Overall, Islamic banking emerges not only as an interest-free financial alternative but also as a strategic actor for inclusive growth, financial stability, and sustainable development. The study concludes that the future success of Islamic banks will depend on strengthening risk management, digital transformation, and financial inclusion policies, in addition to diversifying Shariah-compliant financial products.
