COMPARATIVE ANALYSIS OF BANK STABILITY IN INDONESIA: A NON-PARAMETRIC APPROACH ON DIFFERENT BANKING MODELS

  • Norzitah Abdul Karim Universiti Teknologi MARA, Institute of Islamic Banking and Finance (IIiBF), International Islamic University Malaysia (IIUM)
  • Syed Musa Syed Jaafar Alhabshi International Islamic  University Malaysia (IIUM)
  • Salina Kassim IIUM Institute of Islamic Banking and Finance https://orcid.org/0000-0002-7514-8750
  • Razali Haron Institute of Islamic Banking and Finance (IIiBF), International Islamic University Malaysia (IIUM) https://orcid.org/0000-0003-0415-4093
Keywords: Bank Stability, Z-Score, Islamic Bank, Conventional Bank, Crisis

Abstract

The present study, grounded in theory of financial intermediation, provides new empirical evidence on comparison of bank stability measures of Islamic banks, conventional banks and other bank models in Indonesia. Specifically, 72 conventional banks, 4 Islamic banks, 3 conventional banks with Islamic subsidiaries and 2 subsidiary Islamic banks in Indonesia are considered, focusing on the sample period of 1999-2015. The study adopts z-score as a measure of bank stability, while a non-parametric multiple comparison analysis was used to test the significance of the differences in the bank stability of the different bank models, namely Islamic banks, conventional banks, Subsidiary Islamic banks and conventional banks with Islamic subsidiaries. The sample period is further divided into three sub-periods, namely, before the global financial crisis (1999-2006), during the global financial crisis (2007-2009) and after the global financial crisis (2010-2015) so as to gain more detail findings on the impact of the global financial crisis on the banks’ stability. The impact of local crisis periods (1999-2001) on bank stability of different bank models is also investigated. Findings of this study contribute towards extending the theory of financial intermediation through empirical works of stability of different banking models namely Islamic banks, conventional banks, Subsidiary banks and conventional banks with Islamic subsidiaries.

Author Biographies

Norzitah Abdul Karim, Universiti Teknologi MARA, Institute of Islamic Banking and Finance (IIiBF), International Islamic University Malaysia (IIUM)

Lecturer, Universiti Teknologi MARA;

Phd Student, Institute of Islamic Banking and Finance (IIiBF), International Islamic  University Malaysia (IIUM)

Syed Musa Syed Jaafar Alhabshi, International Islamic  University Malaysia (IIUM)

Institute of Islamic Banking and Finance (IIiBF), International Islamic  University Malaysia (IIUM)

Salina Kassim, IIUM Institute of Islamic Banking and Finance

Dr Salina Kassim is currently Associate Professor at the IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia (IIUM). Prior to becoming an academician, she has several years of working experience in a commercial bank in Malaysia. She teaches Money and Banking, and Islamic Banking and Finance at the under-graduate level, and Islamic Financial System, Financial Economics and Contemporary Issues in Islamic Finance at the graduate level. Her research interests include Islamic banking and finance, and monetary/financial economics. She has published extensively in refereed academic journals in her areas of research interest. Dr Salina also sits on the editorial boards of several reputable international journals. She earned her PhD in Monetary Economics in 2006 from the IIUM and her Masters and Bachelor degrees from the USA in 1992 and 1994, respectively.

Scopus ID: 32667637500

Email: ksalina@iium.edu.my

Razali Haron, Institute of Islamic Banking and Finance (IIiBF), International Islamic University Malaysia (IIUM)
International Islamic University Malaysia, Institute of Islamic Banking and Finance, International Islamic University Malaysia (IIUM), Kuala Lumpur, Malaysia Scopus ID: 23992283900

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Published
2018-03-28
How to Cite
Abdul Karim, N., Alhabshi, S. M., Kassim, S., & Haron, R. (2018). COMPARATIVE ANALYSIS OF BANK STABILITY IN INDONESIA: A NON-PARAMETRIC APPROACH ON DIFFERENT BANKING MODELS. Journal of Islamic Monetary Economics and Finance, 3(2), 201 -. https://doi.org/10.21098/jimf.v3i2.891
Section
Articles