A comparative study of financial performance of islamic banks and conventional banks (original) (raw)
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A Comparative Study of Financial Performance of Islamic Banks and Conventional Banks in Indonesia
2011
The paper compared and examined financial performance of Islamic banks against conventional banks before and after the enactment of Indonesia’s Islamic Banking Act No. 21/2008. The law aims to strengthen the regulatory environment for further growth of Indonesia’s market Islamic finance. The data was based on selected financial statements of Islamic commercial banks in Indonesia from year 2000 to 2007. Financial performance measures were expressed in terms of various financial ratios in which were categorized into profitability, liquidity, risk and solvency and efficiency. To test the hypotheses, Mann-Whitney was employed to compare financial performance of Islamic banks and conventional banks. In general, the study found no major difference in financial performance between Islamic banks and conventional banks, except in terms of its liquidity. This indicated that Islamic banks are generally more liquid as compared to conventional ones.
Islamic Banks vs Conventional Banks in Indonesia: An Analysis on Financial Performances
Jurnal Pengurusan, 2016
Islamic banks in Indonesia havebeen in existence for more than two decades. Substantial development has taken place in this largest Muslim country. Regulator, academicians, and practitioners have been providing significant support with the objective of improving the performance of the Islamic banking. Hence, it is timely to assess whether its performance differs than that of the conventional banks. This paper aims to describe and critically evaluate and compare the financial performance of Islamic banks to that of conventional banks. Data of Capital Adequacy Ratio (CAR), Return on Asset (ROA), Operational Cost/ Operational Revenue (BOPO), Non-Performing Loan (NPL) /Non Performing Financing (NPF) and Loan Deposit Ratio (LDR)/ Financing Deposit Ratio (FDR) for Islamic and conventional banks are examined. The analysis of monthly data covers the period from January 2004 to July 2014 (127 observations). Paired sampled t-test was adopted to see whether there are significant differences in the financial ratios between both banks. This study found that CAR, ROA, BOPO and NPL of conventional banks are significantly higher than that of Islamic banks but not FDR. Based on the result of capital adequacy, the findings suggest that Islamic banks need to have more capital to face the involved risk as that of conventional banks. Conventional banks need to function them selves as financial intermediaries to support the real sector as that of Islamic banks.
A Comparative Analysis of Determinants of Islamic and Conventional Banking Performances in Indonesia
Amwaluna: Jurnal Ekonomi dan Keuangan Syariah
This study attempts to explore comparatively the determinants of financial performances between the conventional and Islamic banks in Indonesia. The determinants investigated in the study include liquidity, non-performing financing, capital adequacy, and operational cost. The samples of this study are three state-owned conventional banks and three Islamic banks that were selected by the purposive sampling technique. Based on the panel regression analysis, the study found that, for the conventional banks, capital adequacy, liquidity, and operational cost had significant influences on banks' performances, while the non-performing loan had an insignificant effect. On the other hand, for the Islamic banks, the liquidity, non-performing financing, and operational cost had significant influences on banks' performance, while capital adequacy had an insignificant effect. These findings provide important implications for the respective banks to design a proper financial policy to enhance their performances by focusing on the significant determinants affecting banks' performances.
Analysis of Indonesian Islamic and Conventional Banking Before and After 2008
International Journal of Economics and Finance, 2016
This study aims to analyze the performance of Islamic banks and conventional banks before and after the implementation of Islamic Banking Act 2008. The performance will be measured using CAMEL ratio selected. This research is considered essential in examining the positive contribution of the application of the Act to improve the performance of Islamic banks in Indonesia. By using secondary data, this study compared the performance of Islamic banks with that conventional bank selected as samples during the study period. Data were analyzed using the Wilcoxon Signed Rank Test for inter-temporal and Mann-Whitney test for inter-bank. Inter-temporal Tests conducted on Islamic Banking showed that a significant difference was only seen in the NPF ratio of 2 years before and after implementation of Islamic Banking Act. As for conventional banks showed a more diverse ie for 1 year before and after the application of the Law on Islamic Banking there are significant differences for the ROA and ROE, two years before and after implementation of the Law Islamic banking there are significant differences for the CAR, ROA, ROE and NIM and for the overall test a significant difference to CAR, ROA, ROE, NIM and efficiency. Inter-bank testing showed that prior to the application of Islamic Banking Act there are significant differences between conventional banks and Islamic banks to CAR, ROA and efficiency. Furthermore, after the application of Islamic Banking Act there is a significant difference for the CAR and LDR / FDR.
Analysis of the Effectiveness of Islamic Banks in Indonesia Period 2010-2019
SHS Web of Conferences
The purpose of this study is to analyze the activities of Indonesian sharia banking institutions before the merger. BSI of state-to-state bank financial ratios revealed in Sharia Bank report. The design/methodology/approach used was regression analysis of panel data, which is a combination of time series data over time periods. Cross- sectional data comprising 2010-2019 and Muamalata. Shariah, BNI Shariah, BRI Shariah, Maybank Shariah, Mega Shariah, BCA Shariah. Conclusion. The results of this study show that the variables CAR and NIM partly differ. This has major consequences for the efficiency (ROA) of Islamic banks. Variables NPF and FDR also have a significant impact on bank performance (ROA) in part.
International Journal of Science, Technology & Management
Banks present their financial statements and then re-analyze them with financial ratios as a benchmark for their performance to distinguish the performance of Islamic banking from conventional banks. The goal is to test the Comparative Analysis. Financial Performance of Islamic Banking with Conventional Banking Listing on the IDX for the 2018-2020 period. A quantitative approach with two different average tests (Independent Sample Test). With a population of 46 banks listed on the Indonesia Stock Exchange for the 2018-2020 period. The samples were 3 Islamic & conventional banks with 9 data. The results showed that the CAR of Conventional Banks did not have a significant difference and the CAR of Islamic Banks did not have a significant difference. The NPL of Conventional Banks and NPLs of Islamic Banks have significant differences. BOPO Conventional Banks and BOPO Islamic Banks do not have a significant difference. ROA of Conventional Banks and ROA of Islamic Banks does not have a s...
ISLAMIC BANKS’ PROFITABILITY AMID THE COMPETITIVE FINANCING IN INDONESIA
This study attempts to analyze the role of internal bank factors towards Islamic banks’ performance in Indonesia during 2006-2013. For this purpose, this study uses panel data approach to estimate the empirical model. In this research, the random effects model is selected to explain the Islamic banks’ profitability behaviour. The results present that all independent variables are good predictor for profitability which is measured by return on asset (ROA). The model shows that net profit margin and financing deposit ratio are significant predictors for Islamic banks’ financial performance. In contrast, non-performing financing and operating efficiency have negative impact to return on asset. In addition, this study indicates that capital adequacy ratio has negative correlation with profitability. It is evident from regression model that the Islamic banks’ profitability strongly depends on the profit margin and funds mobilization. Moreover, increasing in non-performing financing and operating expenses will reduce their profit. These results indicate that Islamic banking industry in Indonesia has not well developed. This study also reveals that the Islamic banks in Indonesia are probably facing losses in recent years. Islamic banks need to invite more funds from depositors and to mobilize their financing into more various business sectors. Islamic banks need to strengthen their risk management frameworks and to ensure their financing stability within the market.
2016
One of the unique banking in Indonesia is a Regional Development Banks (RDB), which is a districts government-owned bank. Indonesia banks have Islamic banking units, where the status usually in division and business unit of the Bank’s parent (conventional). But there are no funds will be mixed with the conventional, because they have a different system of financial records between sharia units and conventional units. The purpose of this study is to comparing the performance of RDB and private banks which has Islamic banking units. The population and sample consists of 24 Islamic business units Regional Development Banks (RDB) and private owned banks. From the 24 banks, only 18 banks were selected to be the sample. The banks are 7 private banks and 11 regional development banks. The period of this study is from 2010 to 2014. Data are taken from the bank’s annual reports. This study using panel data and using pooled Ordinary Least Squares (OLS), random effect and fixed effect analysis...
Comparative Analysis of a Financial Performance on Conventional Banks and Sharia Banks in Indonesia
Advances in Economics, Business and Management Research, 2021
The goal of this analysis was to ascertain the financial output differences of traditional banks and Sharia banks throughout 2014-2018. The collected data in this analysis were secondary data from the financial statements issued by Bank Indonesia. The sampling methodology used in this analysis was for the purposive sampling, so the samples used were 4 samples of traditional banks and 4 samples of Sharia banks taken from conventional banks, which included state-owned banks and Sharia banks with the highest reserves. The analysis technique used to compare the financial results of conventional banks and Sharia banks is the Independent sample t-test method. Performance comparison is measured by financial ratios consisting of CAR, BOPO, ROA, NPL and LDR. The results showed that conventional banks performed better in terms of BOPO, ROA, NPL ratios, while Sharia banks performed better in terms of CAR and LDR ratios.
Airlangga International Journal of Islamic Economics and Finance, 2020
This study aims to examine the universality of Islamic banking services and products and conventional banks in Indonesia to test whether all circles both Muslims and non-Muslims can accept the services and products of Islamic banks and conventional banks. The method used using MANOVA ( Multivariate Analysis of Variance ) test by comparing the performance of Islamic banks and conventional banks represented by several indicators like third party fund and financing or lending in some provinces in Indonesia. There are two categories of provinces, namely the first category is the province of the province with the majority Muslim population and the second is the provincial category of provinces with non-Muslim majority population in Indonesia. There is no significant difference in the performance of third-party funding of Conventional Commercial and Islamic Banking in Provinces with Majority of Moslems and Non-Muslim Majority Provinces. There is no significant difference in the performa...