Financial Performance of Islamic and Conventional Banks in Qatar: A Comparative Analysis

The goal of bank performance evaluation is to guarantee that the resources at their disposal are utilized efficiently. Financial performance analysis is a critical tool for recognizing the bank's weaknesses and strengths across its numerous activities. The CAMELS technique is regarded a supervisory tool to evaluate bank performance based on several aspects, according to the literature review. Regulators use both on-site and offsite monitoring tools to assess a bank's financial stability. The CAMELS rating system encourages transparency, evolution, and change in all financial institutions. Furthermore, this method identifies the structural strengths and weaknesses of financial organizations. This study conducts a comparative analysis of Islamic and conventional banks in Qatar using the CAMELS rating scale from 2015 to 2020. A sample of 14 banks in Qatar was used, four of which were Islamic while the others were conventional. The findings indicate that Islamic banks showcase clear superior performance in Qatar, while outperforming their conventional counterparts in many variables. However, none of the banks in Qatar were able to obtain a rating of 1, indicating there are areas of weaknesses that need to be worked on, particularly in the area of liquidity which was a critical factor for all banks. The Qatar Central Bank should improve monitoring and screening of all Islamic banks in Qatar, according to this study. Furthermore, it is suggested that the Qatar central bank employs the CAMELS system to track operations and field offices for banks functioning to facilitate access to a stable banking sector on a regular basis. CAMELS can be used by banks to track their performance, and then the necessary actions must be undertaken.