The impact of the Corona pandemic on the financial safety indicators of Bahraini conventional and Islamic banks

Abstract

This study aimed to identify the effects left by the Corona pandemic on four of the basic indicators of the financial soundness of Bahraini banks: capital adequacy, asset quality, profitability, and liquidity. The study relied on the data collected for these indicators for all conventional and Islamic banks separately and divided them according to the sector in which they operate into banks operating in the retail sector, and others operating in the wholesale sector. The study covered the period from 2018 to 2019. The study used the descriptive-analytical method to test its hypotheses and reach its results. The study used many statistical methods, including percentages, averages, correlation coefficients, and t-tests. The study reached a set of results, the most important of which is that all types of Bahraini banks witnessed during the Corona pandemic a decrease in the adequacy of their capital, except for Islamic banks operating in the retail sector, which witnessed an increase in the adequacy of their capital. In addition, the asset quality of all Bahraini banks improved during the Corona pandemic, except for Islamic banks operating in the wholesale sector, which did not witness any improvement in the quality of their assets. As for the position in terms of profitability, the profitability of conventional and Islamic banks operating in the wholesale sector has declined, while the profitability rates of those operating in the retail sector have not changed. In addition, the liquidity levels of all types of Bahraini banks have witnessed a significant improvement, except for the traditional banks operating in the retail sector, which witnessed a decline in the levels of liquidity that they maintain during the Corona pandemic.