Comparative study between conventional banks and Islamic banks in Djibouti: Profitability analysis

With the actual growing needs for banks nowadays, it became crucial to assess the performance of banks for the aim of improving financial stability. International literature gave a particular attention to this subject in the last decades. This paper's main purpose is to discuss the major differences between the two major banking system; conventional and Islamic in Djibouti, the emphasis is put on a particular aspect which is profitability. To achieve it, a sum of four banks were selected (two Islamic and two conventional), the main data of the study were collected from these banks and the analysis was carried over four years (2017-2020). The applied method is the Data Envelopment Analysis, using two input variables and two output variables. Findings revealed that within those four years, Islamic banks were more efficient than conventional banks in overall for profitability analysis.