| Popis: |
The pandemic has presented difficult challenges in the banking sector worldwide, in which the sector had to suffer from branches being shut down due to the widespread of the virus. Banks, and especially Islamic banks in Bahrain, had to revaluate their operations in order to adapt to the impact that COVID had on the Bahraini economy. In the case of Islamic banks worldwide, they had to rapidly change in terms of their business environment and operations in order to adapt to the situation they were in during the pandemic while also ensure the safety and wellbeing of both their staff and customers. Several studies have been made regarding the impact of COVID on the performance of Islamic banks, and the different financial indicators that determine the financial risks impacted as well. However, the studies were only limited to countries outside the GCC and focusing on comparing the impacts of COVID on both Islamic and Conventional banks. This study focuses on the impact that COVID had on the profitability of Islamic banks based in Bahrain by analysing Return on Assets (ROA) as a profitability measure and dependent variable. Independent variables that are used in the study are: capital adequacy ratio, current ratio as a liquidity risk measure, change in operating income as a growth measure. In addition, macro-economic factors are considered in the analysis such as GDP and inflation. Dummy variables for the study include the years 2020 and 2021 to indicate if there is an impact from COVID on the performance of Islamic banks. Correspondingly, the years 2008 and 2009 will also be included for the financial crisis dummy variable. The study is based on five different Islamic banks based in Bahrain, which are: Albaraka, Kuwait Financial House (KFH), Ithmaar bank, Bank ABC, and Alsalam bank. Data are extracted from annual reports published on the banks’ website` over a 14-year sample period to analyse the impacts that both the financial crises and COVID had on the performance of Islamic banks. Using quantitative panel data analysis, the study uses the random effects regression model and generalized least squares. By looking into the literature and results, the study concludes that COVID did not have a significant impact on the profitability of Islamic Banks in Bahrain. |
