Comparison between Conventional and Islamic Banks regarding Non-Performing Loans and Bank Performance

Abstract

Credit creation is a vital concern for any financial institution such as commercial banks that are chasing lending rigorously. Therefore, with the massive prevalence of unsecured lending in the last decade, specifically following the financial liberalization of the 2000s, banks are also equally suffering the phenomenon of hazardous recovery. For instance, the study intends to investigate the impact of non-performing loans on bank performance, conventional and Islamic as well. The results of the study indicate that non-performing loans harm the overall performance of banks. The study also concludes that concerning credit recovery, conventional banks are working well as compared to their Islamic counterparts.