An Analysis of the Islamic and Conventional Banking Profitability in Palestine

Abstract

The research paper examines the performance of profi tability of Islamic banks against conventional banks for the period of 2005 to 2010. Two alternative measures of banking profi tability such as Return on Equity (ROE) and Return on Assets (ROA) are used to examine whether there is any differences of profi t rate between Islamic, local and foreign conventional banks. The study concludes that Islamic banks generally provide the similar profi t rate compared to local banks, however Islamic banks provide lower profi t rate compared to foreign banks. Finally the fi ndings also suggest that there is no statistical signifi cant difference in mean return between the Islamic banks, local and foreign banks in Palestine. The study recommends the critical needs for Islamic regulation in order to improve the role of Islamic banking industry in Palestine.