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Comparative Analysis of Profit Rate of Islamic Banks on Investment (ROI) and Fixed Rate of Interest on Loan of Conventional Banks in Bangladesh
Journal article   Peer reviewed

Comparative Analysis of Profit Rate of Islamic Banks on Investment (ROI) and Fixed Rate of Interest on Loan of Conventional Banks in Bangladesh

M R Kabir, Md Hafij Ullah and M M Khan
World Journal of Social Sciences, Vol.2(6), pp.39-48
2012
url
http://www.wjsspapers.com/static/documents/September/2012/4.%20Rokibul.pdfView
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Abstract

Banking, Finance and Investment bank Islamic bank conventional bank profit rate investment fixed interest rate and loan.
The article measures the performance of profit rate on investments of Islamic Bank (i.e. Return on Investment or ROI) against fixed lending rate of local conventional banks, foreign conventional banks and state owned commercial banks in Bangladesh for the period of 2007 until 2010. About 8050 observations were categorized into term loan provided to large, medium and small scale industries, working capital provided to large and small scale industries, export trade financing, housing loan, consumer credit, credit to Non-banking Financial Institutions (NBFIs) and other classes. This study is an attempt to find whether there are any differences of profit rate on investments of Islamic Bank against fixed lending rate of local conventional banks, foreign conventional banks and state owned commercial banks in Bangladesh. Analyses reveal that the foreign commercial banks charged the highest rate on the borrowers during the selected periods. It has also been found that there is a significant difference in mean return between Islamic banks local conventional banks, foreign conventional banks and state owned commercial banks.

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