Differences between the Financial Characteristics of Interest-Free Banks and Conventional Banks

This paper uses logit, probit and discriminant analysis to test for structural differences between the financial characteristics of interest-free banks and conventional banks. The analysis extends to various financial dimensions which evaluate performance, namely: liquidity, leverage, credit risk, profitability and efficiency. The study covers fifteen interest-free banks and fifteen conventional banks. The statistical evidence suggests that the two group of banks may be differentiated in terms of liquidity, leverage and credit risk but not in terms of profitability and efficiency