Measuring the Performance of Islamic Banks in Bangladesh: An Exploratory Study

Abstract

Banking sectors is called the life blood of economy in Bangladesh, Islamic Banks playing a vital rule in this regard. The deposits and investment of the Islamic banking systems are now 25 percent & 30 percent respectively of all private banks deposits and investments. The aim of this paper is to measure the performance of Islamic Banks of Bangladesh for the sake of stakeholders to make economic decision. For this study, eleven trend equations have been tested for different activities of the Islamic banks & Square of correlation coefficient (r2) has also been tested for all trend equations. It is observed that all Islamic banks are able to achieve a stable growth & Square of correlation coefficient (r2) is positive, in many cases above 0.90. It indicates the prospect of Islamic banks in Bangladesh is very bright. The study recommended stakeholders to rely on Islamic Banks for making economic decision as well as recommended Banks to increase the level of compliance with Shariah and state policy to increase their performance.