Assessment of the Financial Performance of Islamic Commercial Banks in Sudan under Credit Risk and Inflation Pressures (1995-2017)
Dr. Omer Allagabo Omer Mustafa

The study aims to assessment the financial performance (FP) of Islamic Commercial Banks (ICBs) in Sudan under credit risk (CR) and inflation pressures (1995-2017). Data were collected from the annual reports of the Central Bank of Sudan (CBOS). Unit root test were applied. Ordinary least square method were used to determine the direction of the relations between the FP measured by return on assets (ROA) as indicator the dependent variable and the following independents variables: ratio of nonperforming loan to total finance, ratio of provision finance by murabaha mode to total finance, capital adequacy ratio and inflation rate were used as indicators the CR. The results found that the CR indicators are negatively affecting the FP of ICBs. The study recommends that ICBs should not totally rely on collateral as a reason for expanding the provision of finance in murabaha mode as the market value of collateral might decrease against the finance. CBOS should adopt contractionary monetary policy to reduce inflation. Moreover, implementation of Basel Accord to support ability of the regulatory capital of ICBs to cope with CR.

Full Text: PDF     DOI: 10.15640/jibf.v7n1a2