Evaluation of Accounting and Market Performance: A Study on Listed Islamic Banks of Bangladesh

TL;DR

This study analyzes the relationship between accounting and market performance of listed Islamic banks in Bangladesh, revealing contrasting performance metrics and the influence of firm-specific factors.

Contribution

It provides a comparative analysis of accounting and market performance of all listed Islamic banks in Bangladesh and examines the impact of firm-specific determinants.

Findings

Social Islamic Bank Limited has superior accounting performance.

Islami Bank Bangladesh Limited has better market performance.

Banks with better accounting performance tend to have poorer market performance.

Abstract

This study compared accounting performance of Islamic banks with their market performance and also assessed the effect of firm-specific determinants and cross-sectional effect on accounting and market performance. This study selected all six listed Islamic banks of Chittagong Stock Exchange and the data were collected for the period of 2009 to 2013. This study reported that Social Islamic Bank Limited exhibits superior accounting performance whereas Islami Bank Bangladesh Limited holds better market performance. However, banks exhibiting superior accounting performance reported to have inferior market performance. Further, random-effect model for ROA reports that there exist significant entity or crosssectional effect on ROA; and operational efficiency and bank size are significantly negatively associated with ROA. However, random-effect model for Tobins Q failed to ascertain entity or cross-sectional effect on Tobins Q and also reveals that firm-specific determinants have no significant impact on Tobins Q.