Proceedings of 11th Asian Business Research Conference
26-27 December, 2014, BIAM Foundation, Dhaka, Bangladesh, ISBN: 978-1-922069-68-9
Comparison between the Performance of Islamic Periods and
Conventional Periods in a Bank: A Study Based on First Security
Islami Bank Ltd., Bangladesh
Serajul Islam* and Humayun Kabir Mehedi**
The increasing awareness on Islamic banking and finance has created a huge demand for shari’ah
based of shari’ah compliant products. Bank, especially are trying to capture this huge market by
either converting themselves into a full fledge Islamic banks or opening a window for the Islamic
based transactions. Islamic Banking in Bangladesh started in 1983 with the establishment of first
Islamic bank, Islami Bank Bangladesh Ltd, in compliance with the principles of Islamic shari’ah in
Islamic Banking practices. This study highlights the comparisons between two modes of operation of
First Security Islami Bank Ltd., Bangladesh (FSIBL) for the period of 2004-2013. The study
evaluates performance of the FSIBL in profitability, liquidity, risk and efficiency before and after
converting into Islamic banking during these periods. Financial ratios (12 in total) such as Return on
Assets (ROA), Return on Equity (ROE), Loan to Deposit Ratio (LDR), Loan to Asset (LAR), and Debt
to equity ratio (DER), Assets Utilization (AU) and Income to Expenses Ratio (IER) are used to
assess bank’s performances during this two period. The study found that Islamic periods are more
profitable, more solvent (less risky), and also more efficient comparing to the conventional periods.
This study concludes that there is a statistical significance between the trend towards the switching
to Islamic banks and the low risk nature with high level of profit that characterized First Security
Islami Bank Ltd., Bangladesh (FSIBL).
Field of Research: Banking
*Serajul Islam ,Associate Professor, Department of Business Administration, International Islamic University
Chittagong, Bangladesh, E-mail: serlambd@yahoo.com
**Md. Humayun Kabir Mehedi, Department of Business Administration, International Islamic University Chittagong,
Bangladesh, E-mail: humayunkabirmehedi@yahoo.com