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The purpose of this paper is to analyze the total factor productivity (TFP)[1] change and to investigate its determinants in the case of MENA Islamic banks.

In the first stage, bootstrapped Malmquist index approach is used to provide a robust analysis of the changes in the productivity of 33 Islamic banks operating in 10 MENA countries during the period 2006-2011. In the second stage, panel data models are used to investigate the determinants of TFP change.

The results of the first stage show that Gulf Cooperation Council (GCC) banks have known a productivity decline between 2006 and 2011 due to technical regress and scale inefficiency. In contrast, non-GCC banks have improved their productivity by benefiting from scale economies. The results of the second stage show that the productivity growth of MENA Islamic banks was mainly determined by bank-specific factors and that TFP indices decreased in the period of global financial crisis.

This paper provides relevant recommendations for improving the productivity of Islamic banks operating in the MENA countries.

This paper attempts to fill a demanding gap in the literature by examining productivity change and investigating its determinants using cross-country data of MENA Islamic banks. In addition, it is one of the few studies that have applied the bootstrapped Malmquist index approach in the case of Islamic banking.

This paper aims to compare Islamic and commercial banks in the region of Middle East and North Africa (MENA) in terms of profitability and stability.

The study combines both the descriptive and analytical approaches. It considers panel data sets and adopts panel data econometric techniques.

The determinants of banks profitability and stability are different according to bank’s type. The results show that Islamic banks are more profitable than commercial banks, while on the other hand, commercial banks are more stable than Islamic banks. It is also concluded that banks profitability and stability are determined through some bank’s characteristics variables and macroeconomic variables in addition to the financial crises. MENA commercial and Islamic banking was affected by the financial crises in terms of profitability and stability. Additionally, larger banks are more stable than smaller banks, and off-balance sheet activities increase banks’ vulnerability for both commercial and Islamic MENA banks.

The most prominent limitation is the lack of data, as we had to exclude some variables because of missing observations. As a result, the authors could not use data envelopment approach and stochastic frontier approach to evaluate banks efficiency in MENA countries rather than the financial ratios.

Commercial banks need to enhance their capitalization to improve their profitability. Additionally, Islamic banks need to improve the risk assessment and adopt some of the available risk management tools. Moreover, the banking system should take advantage of relatively higher Islamic banks profitability and use the unexploited profit opportunities through spreading into those countries with limited availability, such as the North African countries.

This study address both banks profitability and stability in an emerging region that includes banks of different types (Islamic and commercial) which are located in different counties that allows accounting for operational and institutional differences.

The purpose of this paper is to test the validity of irrelevant theory empirically by exploring the relationship between cash dividends, profitability, leverage and investment policy with the value of banking institutions in the Middle East and North Africa (MENA) markets.

The paper adopts Ohlson’s (1995) valuation model. The author estimates models by using static panel (random and fixed effects) techniques and the dynamic technique, namely, the GMM estimation. The empirical study covers a sample of 122 conventional and 37 Islamic banks listed on stock markets in 12 MENA countries over the period 1999–2018.

The empirical results show that dividend yield has no significant association with the value of conventional banks, whereas profitability, growth opportunity and leverage have a significant positive impact on the value of conventional banks. In contrast, the results for a sample of Islamic banks indicate that the dividend yield, profitability and leverage have a significant positive effect on the value of Islamic banks, whereas growth opportunity has no significant effect on the value of Islamic banks. Therefore, these results support, to a greater extent, the validity of the dividend irrelevance theory of Modigliani and Miller for conventional banks but would not be accepted for Islamic banks in the MENA region.

This study is restricted to a sample of one type of financial firms, banking firms listed in the MENA countries. In addition, the study has dealt with one type of dividend (the cash dividend).

Highlighting the difference between conventional and Islamic banks is crucial to understanding dividend policy behavior and to providing investors information to be integrated in their valuation setting to make informed corporate decisions.

To the best of the author’s knowledge, the present study is the first of its kind that it draws a comparative analysis by testing empirically the validity of the Irrelevant Theory to banks in the MENA region covering a long time period in the recent past.

Islamic banks have significantly different balance sheets from their conventional counterparts, leading to different implications in relation to liquidity creation compared to conventional banks. This work, first, investigates the liquidity creation of conventional and Islamic banks in Middle Eastern and North African (MENA) countries between 2011 and 2016. It then tests the relationship between liquidity creation and performance of these banks.

It uses the data of 491 commercial banks across 18 MENA countries between 2011 and 2016. The analysis is based on panel data techniques.

The banks created US$18.596 trillion of liquidity, about 28.4% of total assets. Conventional banks created more liquidity compared with Islamic banks. Nevertheless, Islamic banks created more liquidity per asset compared with conventional banks. The regression analysis revealed a significant and negative correlation between liquidity creation and performance of the banks using return on average equity (ROAE) measure. However, no significant relationship is observed between liquidity creation and return on average assets (ROAA) of MENA banks. Moreover, there is no difference between Islamic and conventional banks in the relation between liquidity creation and bank performance.

The data are limited to the period 2011-2016; the period of this study was selected based on yearly data availability from the data source. Accounting measures were used to study the effect of liquidity creation on bank profitability, and the market-based measures were excluded, as there is no uniform sources in these countries that can be used to collect market-based data.

Bank managers must reach a trade-off between the advantages and disadvantages of liquidity creation, as well as consider the negative relationship between liquidity creation and bank performance when making their decisions.

First, to the best of the authors’ knowledge, this work is the first to analyse the relationship between the liquidity creation and performance of conventional and Islamic banks in MENA. Second, this study uses a sample of Islamic and conventional banks in MENA that have detailed information on the Orbis Bank Focus dataset, which is the most comprehensive database of commercial banks in the MENA region.

The purpose of this paper is to provide a comparative analysis on the performance of the Islamic banking sector in 16 MENA (Middle East and north Africa) and Asian countries.

A two‐stage procedure is followed to examine the efficiency of Islamic banking sectors in 16 MENA and Asian countries. First, data envelopment analysis (DEA) is used to estimate the technical, pure technical, and scale efficiency for each bank in the sample. Following previous research, an annual frontier specific to each year is constructed, as it is more flexible and thus more appropriate than estimating a single multiyear frontier for the banks in the sample. It has been pointed out that the principal advantage of having panel data is the ability to observe each bank more than once over a period of time. Nevertheless, the issue is also critical in a continuously changing business environment because the technology of a bank that is most efficient in one period may not be the most efficient in another. To an extent, this relieves also the problems related to the lack of random error in DEA by allowing an efficient bank in one period to be inefficient in another, assuming that the errors owing to luck or data problems are not consistent over time. In the second stage regression, Tobit regression is used to determine the impact of internal and external factors on Islamic banks' efficiency.

The results suggest that the MENA Islamic banks have exhibited higher mean technical efficiency relative to their Asian Islamic bank counterparts. The empirical findings suggest that during the period of study, pure technical inefficiency outweighs scale inefficiency in both the MENA and Asian countries banking sectors. Banks from the MENA region were found to be the global leaders by dominating the efficiency frontier during the period of study. Positive relationship was found between bank efficiency and loans intensity, size, capitalization, and profitability. The empirical results show that technically more efficient banks are those that have smaller market share and low non‐performing loans ratio. A multivariate analysis based on the Tobit model reinforces these findings.

The paper aims to fill a demanding gap in the literature by providing the latest empirical evidence on the determinants of the performance of Islamic banks in 16 MENA and Asian countries.

This paper aims to describe a new method for constructing the FintTech Index that measures the development of FinTech in the conventional and Islamic banking sectors in the Middle East and North Africa (MENA). It also tests the effect of this new proxy on the performance of conventional and Islamic banks in MENA countries.

Using data from Islamic and conventional banks in the MENA region between 2010 and 2020, the authors rely on Text Mining Technology with the help of AntConc, principal component and factor analysis. The study also uses the simultaneous equation model to test the interdependent relationship between FinTech and bank performance.

The study argues that the proposed measure effectively represents the FinTech industry in the MENA financial markets. The results provide micro evidence on the application of FinTech innovation in Islamic and conventional banks to improve their performance, profitability, stability and efficiency. Furthermore, the findings can provide insights for practitioners and researchers interested in implementing FinTech collaboration to enhance the performance of Islamic and conventional banks in the MENA region.

Investors can leverage this FinTech Index in portfolio investments, trading strategy and hedging in MENA countries. In addition, policymakers can benefit from the challenges outlined in this work to support the development and incubation of FinTech in conventional and Islamic banks. Thus, they can better recognize the new generation of banking services with which they need to deal and collaborate.

This paper makes a methodological contribution to the literature on FinTech search patterns by combining factor analysis with corpus processing software. This is the most comprehensive global FinTech index. In addition, to the best of the authors’ knowledge, this study is the first to examine the simultaneous relationship between the FinTech index and the performance of Islamic and conventional banks.

Which of the banking stream is relatively more profitable in Middle Eastern and North Africa (MENA) region?

The empirical study covers a sample of 15 conventional and 15 Islamic banks for the period 2002-2009.The authors estimate models using the generalized method of moments in system, of Blundell and Bond (1998). They exploit an up-to-date econometric technique which takes into consideration the issue of endogeneity of regressors to evaluate the comparative profitability of Islamic and conventional banks in the MENA region.

Empirical analysis results show that the determinants’ significance varies between Islamic and conventional banks. Profitability seems to be quite persistent in the MENA region reflecting a higher degree of government intervention and may signal barriers to competition.

The main interest is to develop a comprehensive model that integrates macroeconomic, industry-specific and bank-specific determinants. The paper makes comparison of the performance between two different banking systems in the MENA region. The authors consider a variable crisis to gain additional insights into the impacts of the financial crisis on MENA banking sector.

This study examined the impact of; COVID-19 investor sentiment, COVID-19 cases, geopolitical risk (GPR), economic policy uncertainty (EPU), oil returns and Islamic banking on bank stock returns. In addition, it examined whether Islamic bank stock returns differed from conventional banks when interacting with selected variables.

This study consisted of 137 conventional and Islamic stock market listed banks in 16 Middle East and North Africa (MENA) countries from February 2020 to July 2021. Monthly data were used for bank stock returns, number of COVID-19 cases, COVID-19 investor sentiment, oil price and EPU, while GPR data were obtained annually. This paper used unconditional quantile regression (UQR) in its analysis.

COVID-19 investor sentiment and EPU negatively influenced bank stock returns. However, oil returns were only positive and significant in first quantile. Conversely, GPR negatively impacted bank returns up to the median quantile, while the impact was positive in upper quantiles. Islamic banks outperformed conventional banks in all quantiles. Additionally, GPR negatively influenced Islamic bank returns up to 75th quantile, while oil returns negatively impacted Islamic bank returns up to 95th quantile. Ultimately, COVID-19 investor sentiment and EPU positively influenced Islamic bank returns up to 95th quantile.

Market conditions must be considered when implementing investment decisions and policies, as the effects of market shocks are mostly asymmetrical. For example, it is important for international investors to take into consideration asymmetric factors, such as market uncertainty in oil market. Especially in bearish Islamic markets, bad news concerning uncertainty can be perceived as riskier than good news.

A change in health sentiment, such as COVID-19 cases and COVID-19 investor sentiment, can be used to determine future direction of conventional and Islamic stock markets. Asymmetric effects associated with market news can make portfolio management more effective. COVID-19 investor sentiment states can be used to predict Islamic market index dynamics in MENA region.

This paper offered insight into heterogeneity of market conditions and dependencies of Islamic banks' stock market returns on COVID-19 investor sentiment and uncertainty, among others that should be considered when implementing investment decisions and policies.

The purpose of this paper is to investigate empirically the channels through which Islamic and/or conventional banking can spur economic growth in MENA region.

The study uses a range of developed econometric approaches, including panel cointegration technique, panel Granger causality test and a panel-based vector error correction model (VECM), to analyze explicitly all the causal relationships among Islamic banking, conventional banking development and economic growth in a unified framework.

The empirical results show that Islamic banking in MENA countries not only leads to economic growth but also affects positively and significantly conventional banking development. Thus, Islamic banking has an active role and could be classified as “supply-following” since its development only leads to economic growth, whereas conventional banking, with passive role, could be classified as “demand-following” since it only reacts to economic growth in long run.

The study has two principal limitations. It is conducted within a relatively limited time period and sample of countries. Also, the used models did not take into account the impact of others financial and macroeconomic variables like stock market development, interest rate, inflation and financial crisis.

The results have two main implications. First, in MENA countries, well-functioning Islamic banking sector could not only promote economic growth but also can be served as a development factor for their conventional one. Second, unlike conventional banks, the customer of Islamic banks seems not to be motivated by interest and profits. Rather religious factors are recommended as the main motive for investing and saving in Islamic banks.

The study tries to perceive whether there exists a substitution or complementarity effect between Islamic and conventional banking in promoting economic growth for MENA countries. This situation is neither revealed nor clarified in the relevant literature.

This study aims to show the relationship between competition, financial stability and ownership structure of banks in the Middle East and North African (MENA) countries.

This study uses the generalized method of moments (GMM) estimators to generate research results. This study uses an unbalanced panel dynamic data set. It covers the period 2011 to 2017 in MENA banks.

This study implies that there is a significant and positive relationship between market power and the financial stability of banks in MENA countries. It explains a competitive market focus on credit risk, which turns them risky. From the bank’s ownership view, Islamic banks are in a less risky position which means Islamic banks are more stable than other ownership structures. On the other hand, government specialized institute displays their poor financial stability and risky from other ownership structures. Unfortunately, there is no significant impact of ownership structure on competition unless Islamic banks prove that they (Islamic banks) perform better in market power.

The empirical findings of this study suggest that MENA banks should improve the process of managing and monitoring the non-performing loan (loan segment business). It reduces the level of credit risk, which leads to achieving more profit. It also recommends that loan quality should improve immediately in this region for declining financial disruption. Based on the ownership structure, policymakers and stakeholders should adjust their risk and financial stability. Notably, the stakeholders can focus on Islamic banks in this region as this type of ownership structure showing superiority over other ownership structures.

This study is based on the latest data set and produced outcomes by using a GMM estimator. It also uses multiple measures of competition and risk variables to get robust results. Moreover, to the best of the knowledge, this study is the pioneer to examine the competition, risk (financial stability) and ownership structure of banks in the MENA countries.