Abstract

The purpose of this study is to determine the Gap between the assets and liabilities of Islamic and conventional banks. It also finds the impact of liquidity risk, capital adequacy, management efficiency, operating cost, and transaction size on net interest margin for conventional banks and net profit margin for Islamic banks in Pakistan, Malaysia, Bahrain and UAE. Short-term and long-term asset and liabilities gap is further emphasized in this study. Data was extracted from the financial statements of both types of banks for the period of 2008-2014. This study finds that there is negative short-term gap for both types of banks; while the long-term gap for both types of banks is positive. Results show that operating cost is important factor which affects the profit margins and progress quality of management of banks. Finally, the overall results show that the conventional banks have better assets and liabilities structure of profitable assets at low cost liabilities.

Keywords

Asset Liability Management; Capital Adequacy; Liquidity Risk; Operating Cost; Transaction Size; Net Interest Margin; Net Profit Margin.