Stability of Islamic versus conventional banks: a Malaysian case

The purpose of this paper is to raise certain questions within the Malaysian banking sector and find the appropriate answers. The research questions of this paper are: a) whether Islamic banks are more stable relative to conventional banks; and b) what are the determinants of stability for both ty...

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Main Authors:	Muhamad Azhari Wahid, Humayon Dar
Format:	Article
Language:	English
Published:	Penerbit Universiti Kebangsaan Malaysia 2016
Online Access:	http://journalarticle.ukm.my/10773/ http://journalarticle.ukm.my/10773/ http://journalarticle.ukm.my/10773/1/jeko_50%281%29-9.pdf

id	ukm-10773
recordtype	eprints
spelling	ukm-107732017-10-10T08:27:15Z http://journalarticle.ukm.my/10773/ Stability of Islamic versus conventional banks: a Malaysian case Muhamad Azhari Wahid, Humayon Dar, The purpose of this paper is to raise certain questions within the Malaysian banking sector and find the appropriate answers. The research questions of this paper are: a) whether Islamic banks are more stable relative to conventional banks; and b) what are the determinants of stability for both types of banks? In measuring and comparing the stability of Islamic and conventional banks, this study employs the financial soundness indicators (FSI) of the International Monetary Funds (IMF) and the z-score index. These are then followed by a series of parametric and non-parametric tests. Thereafter, a pooled ordinary least squares (OLS) robust regression is applied to examine the determinants of stability for Islamic and conventional banks. The results reveal that Islamic banks are significantly less stable than conventional banks. However, when the analysis is conducted based on a sample of small and large banks, the results suggest that only large Islamic banks are less stable than large conventional banks. In contrast, small Islamic banks are found to be more stable than small conventional banks. Furthermore, the results reveal that bank size, the level of capitalisation and income diversification are important determinants for the stability of Malaysian Islamic and conventional banks. Penerbit Universiti Kebangsaan Malaysia 2016 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/10773/1/jeko_50%281%29-9.pdf Muhamad Azhari Wahid, and Humayon Dar, (2016) Stability of Islamic versus conventional banks: a Malaysian case. Jurnal Ekonomi Malaysia, 50 (1). pp. 111-131. ISSN 0127-1962 http://www.ukm.my/fep/jem/content/2016.html
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Kebangasaan Malaysia
building	UKM Institutional Repository
collection	Online Access
language	English
description	The purpose of this paper is to raise certain questions within the Malaysian banking sector and find the appropriate answers. The research questions of this paper are: a) whether Islamic banks are more stable relative to conventional banks; and b) what are the determinants of stability for both types of banks? In measuring and comparing the stability of Islamic and conventional banks, this study employs the financial soundness indicators (FSI) of the International Monetary Funds (IMF) and the z-score index. These are then followed by a series of parametric and non-parametric tests. Thereafter, a pooled ordinary least squares (OLS) robust regression is applied to examine the determinants of stability for Islamic and conventional banks. The results reveal that Islamic banks are significantly less stable than conventional banks. However, when the analysis is conducted based on a sample of small and large banks, the results suggest that only large Islamic banks are less stable than large conventional banks. In contrast, small Islamic banks are found to be more stable than small conventional banks. Furthermore, the results reveal that bank size, the level of capitalisation and income diversification are important determinants for the stability of Malaysian Islamic and conventional banks.
format	Article
author	Muhamad Azhari Wahid, Humayon Dar,
spellingShingle	Muhamad Azhari Wahid, Humayon Dar, Stability of Islamic versus conventional banks: a Malaysian case
author_facet	Muhamad Azhari Wahid, Humayon Dar,
author_sort	Muhamad Azhari Wahid,
title	Stability of Islamic versus conventional banks: a Malaysian case
title_short	Stability of Islamic versus conventional banks: a Malaysian case
title_full	Stability of Islamic versus conventional banks: a Malaysian case
title_fullStr	Stability of Islamic versus conventional banks: a Malaysian case
title_full_unstemmed	Stability of Islamic versus conventional banks: a Malaysian case
title_sort	stability of islamic versus conventional banks: a malaysian case
publisher	Penerbit Universiti Kebangsaan Malaysia
publishDate	2016
url	http://journalarticle.ukm.my/10773/ http://journalarticle.ukm.my/10773/ http://journalarticle.ukm.my/10773/1/jeko_50%281%29-9.pdf
first_indexed	2023-09-18T19:58:24Z
last_indexed	2023-09-18T19:58:24Z
_version_	1777406684304506880

Stability of Islamic versus conventional banks: a Malaysian case

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