Success Factors of Islamic Banks: An Empirical StudyIt is also important to search for the causes of asset increase. While we
find that the cause of increase in the assets of banks C and G is customers’
deposits, the increase in the assets of bank B is an increase in capital. Hence,
the banks C and G were really able to relate to customers in ways
fundamentally different from other banks, such that they were able to gain
the confidence of many of their customers. It is noticeable; however, that
bank G is the sole provider of Islamic services in its market while bank C
faces strong competition in its domestic market. Also both banks are old in
the market; one of them is the oldest Islamic commercial bank and the other
is one of the first few banks.
However, the increase in total assets is also a partial indicator of the
ability of Islamic bank to achieve high profitability. That is why it is necessary
to look at Table 2 to complete that picture. This table shows the growth of
invested assets.
Table 2: Percentage of Increase in Invested Assets
BANK 1998/99 1999/2000 2000/01 1998/2001 Average
A 1.80 14.53 8.53 26.54 8.85
B 0.74 21.07 1.05 23.26 7.75
C 26.73 25.53 28.66 104.09 34.70
D 33.31 -18.56 -3.55 4.72 1.57
E 0.86 4.70 4.79 10.67 3.56
F --- 5.23 -22.70 -18.66 -9.33
G 5.70 15.32 21.18 47.70 15.90
Average 11.46 9.69 5.42 28.33 9.00An initial look at Table 2 does not give a right picture of the
achievements of many of the Islamic banks. With the exception of just two,
no bank was able to maintain the same rates of increase in assets when it
comes to their investments. In other words, five of these Islamic banks were
unable to absorb in their investments the rate of increase in their assets,
making the growth rate of their invested assets lower than the growth rate in
total assets as illustrated in Figure 1 above.
Bank C, which recorded the greatest increase in total assets, was able to
raise its investment index, since it was able to make more increase in its
investments than that of the total assets by more than 9 points. Next is Bank
G, which was able to raise its investment index during the period under
study. Its invested assets grew more than its total assets by more than 5 per
cent. To explain the causes of this achievement for bank G, its method of
administration needs to be studied. So too should be the qualification of the