THE EMERGENCE AND GROWTH OF ISLAMIC BANKS IN KINGDOM OF BAHRAIN- A STUDY IN COMPARISON WITH CONVENTIONAL BANKS

Bahrain's banking system has both Conventional Banks and Islamic Banks and is the chief constituent of the monetary system, totaling for more than 85% of the total monetary assets. In 1979, Bahrain Islamic Bank is established in Bahrain which is the first-ever Islamic commercial bank in Bahrain and the third bank in Gulf Cooperation Council (GCC). Bahrain is the home to the biggest cluster of institutions of Islamic finance in the region of Middle East. Today, Bahrain Islamic Bank had emerged into an international leader in the field of Islamic finance. Islamic banks in Bahrain offer awide range of products such as Mudaraba, Musharaka, Murabaha, Ijara, Al Salam and Istitsna'a and other structures employed in conservative finance, suitably customized in accordance with Shariah principles. The aim of this study is to examine and the compare the growth and financial performance of Islamic Banks (IB) with that of Conventional Banks (CB) in Kingdom of Bahrain. The variables considered for the study are Total Value Assets, customers' current account in IB and customer deposits in CB, Total Value of Financing and Investing Activities in IB and Total Value of Loans and advances in CB, Total Value of Income generated from financing and investing in IB and Total Net Interest Income in CB and Operating profits etc.,. The outcome of this study exhibits that Islamic banks in the kingdom of Bahrain have been showing better performance, higher growth rate. The growth rate of total value of financing and investing activities in IB is higher when compared to the total value of loans and advances in CB.