A Comparison of Financial Soundness of Conventional & Islamic Commercial Banks in Bangladesh: A Bank-O-Meter Model Approach

Abstract

The prime objective of the paper is to measure and compare the financial soundness of Conventional as well as Islamic commercial banks in Bangladesh using the Bank-o-meter model. The Bank-o-meter model is the model that helps to find the solvency scores of the banks to avoid insolvency issues and it is used to measure the financial position of banks. This model was developed by International Monetary Fund (IMF). The study found that all the conventional, as well as Islamic banks, are super sound but Islamic banks are financially less sound compared to their conventional counterparts. The study also suggests that the management of Islamic banks should give extra emphasis on maintaining sound management and ensuring adequate liquidity.