The Impact of the Pandemic on the Financial Markets: The Resilience of GCC Islamic Banks During the COVID-19 Crisis

This chapter examines the impact of the recent global healthcare crisis on the resilience of the Islamic and conventional banks from the six GCC countries. We compare the financial ratios of the banks derived from the 3Q2020 financial statements of 51 publicly listed regional banks. The data numbers are annualized to cover banking activities in the region during the pandemic year. Analytical results suggest that GCC Islamic banks performed better than their conventional peers. GCC Islamic banks were strongly capitalized before the pandemic, except for Al Izz bank in Oman. Al Izz bank was also later merged with Oman Arab Bank. The fact that Islamic banks do not engage with derivatives also helped GCC Islamic banks remain robust during the crisis. Therefore, one would recommend that Islamic banks, along with the disruptive financial technology of the day (FinTech), can help the post-COVID-19 economic world to stabilize.