Comparative Study of Income and Cost Efficiency of Islamic and Conventional Banks of Bahrain

The development of service sector is crucial in contributing to the GDP of any nation. The banking system plays an important role in the development of a country. The commercial banking system dominates the financial sector by dealing with the majority of financial transactions of a country. The existence of Islamic and non-Islamic banks has contributed for the development of the economy. Commercial banks in Bahrain consist of interest-based conventional banks and interest-free Islamic banks (based on Islamic sariah). The performance of conventional and non-conventional banks is satisfactory in Bahrain. The present study focuses on the comparative analysis of financial performance of Islamic and non-Islamic banks in terms of cost and income in Bahrain. The study uses financial tools like profitability, liquidity and solvency, commitment to economy and community efficiency and productivity of both streams of banks.