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The study has evaluated and compared the financial performance of Islamic banks and conventional banks in Tanzania during year 2012 to 2016, to establish whether there were significant differences between financial performances of the two banking category. Data for the study were mainly extracted from the financial statements of the sampled banks, which were the Amana Bank and CRDB. CAMEL model was employed in the analysis of the financial performances and the mean ratios of each category were compared through inter-bank analysis. Finally, a T-test was carried out to establish whether there were significant differences between the financial performances of the two banking category. The study has found out there was a good CAMEL in banks in all performance ratios used. This study also, has found that there was a statistical significantly difference in Financial Performance between the Convectional and Islamic bank. The calculated mean of the CAMEL model found that the CRDB bank had a better financial performance than Amana bank. The t-test result also showed the statistical difference between the financial performances of the banks by using the CAMEL model. Furthermore, the study has revealed that, Conventional banks outperformed Islamic banks in overall financial performances during the study period, though there was no significant difference between the financial performances of the two banking categories. The study has implication to knowledge, theory and management practice as to improve our understandings on the comparison between Islamic banks and Conventional bank. On the same line, it provides information on the financial performance in Tanzania banking industry context.
The study recommended to both banks to reduce expenses which will also reduce income to expenses ratio. Also based on the findings, both banking categories provided equal opportunities and are recommended to Investors, savers, borrowers among other decision makers. |
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