ISSN: 2520-4750 (Online), 2521-3040 (Print)

Measurement and Comparison of the Financial Soundness of Conventional and Islamic Commercial Banks in Bangladesh using the Altman’s Z Score Model

Author (s)

Shohel Rana & A.S.M. Kamruzzaman

Abstract

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The prime objective of the paper is to measure and compare the financial soundness of conventional and Islamic commercial banks in Bangladesh and to suggest ways to improve the financial status of both categories of banks. Altman’s z-Score model is used to measure and predict the financial soundness of selected banks while an independent sample t-test is also used to measure the gap in financial soundness between conventional and Islamic commercial banks. This study uses secondary data and covers ten years study period of 2010-2019. The major finding of the study is that all conventional and Islamic commercial banks are in safe zone during the study period. Only First security Islamic bank ltd. was in the gray zone in 2010 but successfully recovered in the later period. This study also finds that conventional commercial banks are better in terms of financial health than Islamic commercial banks but this difference in financial soundness is not statistically significant.

Keywords: Financial soundness, conventional and Islamic commercial banks, Altman Z-score, Independent t-test.

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Title:Measurement and Comparison of the Financial Soundness of Conventional and Islamic Commercial Banks in Bangladesh using the Altman’s Z Score Model
Author:Shohel Rana & A.S.M. Kamruzzaman
Journal Name:International Journal of Science and Business
Website:ijsab.com
ISSN:ISSN 2520-4750 (Online), ISSN 2521-3040 (Print)
DOI:https://doi.org/10.5281/zenodo.5800454
Media:Online
Volume:5
Issue:12
Acceptance Date:18/12/2021
Date of Publication:23/12/2021
PDF URL:https://ijsab.com/wp-content/uploads/855.pdf
Free download:Available
Page:52-62
First Page:52
Last Page:62
Paper Type:Research paper
Current Status:Published

 

Cite This Article:

Shohel Rana & A.S.M. Kamruzzaman (2021). Measurement and Comparison of the Financial Soundness of Conventional and Islamic Commercial Banks in Bangladesh using the Altman’s Z Score Model. International Journal of Science and Business, 5(12), 52-62. doi: https://doi.org/ 10.5281/zenodo.5800454

Retrieved from https://ijsab.com/wp-content/uploads/855.pdf

 

About Author (s)

Shohel Rana(corresponding author),Associate Professor, Dept. of Finance and Banking, Jatiya Kabi Kazi Nazrul Islam University, Trishal, Mymensingh, Bangladesh & PhD Fellow, Department of Finance, University of Rajshahi, Rajshahi, Bangladesh.

Professor Dr. A.S.M. Kamruzzaman, Dept. of Finance, University of Rajshahi, Rajshahi, Bangladesh.

 

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DOI: https://doi.org/10.5281/zenodo.5800454

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