Factors Influencing Performance of the UAE Islamic and Conventional National Banks

The objective of this study is to investigate some influential differences in UAE's Islamic and conventional national banks during the period 1996-2008. UAE Islamic banks have a small market share, though there is an increasing demand for their services. This gives rise to an examination of the factors that influence the performance of these banks compared with conventional banks. A regression model was used in which ROE and ROA were used alternatively as dependent variables. A set of internal and external factors were considered as independent variables including: GDP per capita, size, financial development indicator (FIR), liquidity, concentration, cost and number of branches. The results indicate that liquidity and concentration were the most significant determinants of conventional national banks' performance. On the other hand, cost and number of branches were the most significant determinants of Islamic banks' performance