Title: The impact of risk-taking on performance of Islamic and conventional banks in Qatar, Saudi Arabia and UAE

Authors: Henda Amri; Taher Hamza

Addresses: The Higher Institute of Management (ISG), University of Sousse, Sousse, 4000, Tunisia ' EM Normandie Business School, Metis Lab, Paris, 92110, France

Abstract: This paper investigates the effect of risk-taking on performance for Islamic and conventional banks in Qatar, Saudi Arabia and UAE during the period 2003-2014. First, our findings reveal a slight outperformance of Islamic banks compared to their conventional counterparts, especially during the subprime crisis. Second, Islamic banks exhibit lower credit, liquidity and idiosyncratic risks. However, conventional banks have the least average of systematic risk. Third, we underline a positive effect of capital adequacy on bank performance. Nonetheless, this performance is affected negatively by credit, idiosyncratic and systematic risks. Furthermore, the insolvency and liquidity risk have no significant impact on bank performance. Moreover, the findings show a positive effect of GDP per capita and of inflation but a negative effect of bank size on bank profitability. Finally, the results show that the subprime financial crisis did not significantly affect banks' performance in Qatar, Saudi Arabia and UAE.

Keywords: risk-taking; bank performance; Islamic banks; conventional banks.

DOI: 10.1504/IJAAPE.2025.144907

International Journal of Accounting, Auditing and Performance Evaluation, 2025 Vol.21 No.1/2, pp.42 - 64

Received: 19 Jan 2023
Accepted: 13 Apr 2023
Published online: 07 Mar 2025 *