Islamic banks vs conventional banks in Indonesia: an analysis on financial performances

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 bankin...

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Main Authors:	Sukmana, Raditya, Febriyati, Nur Ahlina
Format:	Article
Language:	English
Published:	Penerbit Universiti Kebangsaan Malaysia 2016
Online Access:	http://journalarticle.ukm.my/10812/ http://journalarticle.ukm.my/10812/ http://journalarticle.ukm.my/10812/1/9450-48414-1-PB.pdf

id	ukm-10812
recordtype	eprints
spelling	ukm-108122017-10-11T07:56:36Z http://journalarticle.ukm.my/10812/ Islamic banks vs conventional banks in Indonesia: an analysis on financial performances Sukmana, Raditya Febriyati, Nur Ahlina 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. Penerbit Universiti Kebangsaan Malaysia 2016 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/10812/1/9450-48414-1-PB.pdf Sukmana, Raditya and Febriyati, Nur Ahlina (2016) Islamic banks vs conventional banks in Indonesia: an analysis on financial performances. Jurnal Pengurusan, 47 . pp. 81-90. ISSN 0127-2713 http://ejournal.ukm.my/pengurusan/issue/view/856
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Kebangasaan Malaysia
building	UKM Institutional Repository
collection	Online Access
language	English
description	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.
format	Article
author	Sukmana, Raditya Febriyati, Nur Ahlina
spellingShingle	Sukmana, Raditya Febriyati, Nur Ahlina Islamic banks vs conventional banks in Indonesia: an analysis on financial performances
author_facet	Sukmana, Raditya Febriyati, Nur Ahlina
author_sort	Sukmana, Raditya
title	Islamic banks vs conventional banks in Indonesia: an analysis on financial performances
title_short	Islamic banks vs conventional banks in Indonesia: an analysis on financial performances
title_full	Islamic banks vs conventional banks in Indonesia: an analysis on financial performances
title_fullStr	Islamic banks vs conventional banks in Indonesia: an analysis on financial performances
title_full_unstemmed	Islamic banks vs conventional banks in Indonesia: an analysis on financial performances
title_sort	islamic banks vs conventional banks in indonesia: an analysis on financial performances
publisher	Penerbit Universiti Kebangsaan Malaysia
publishDate	2016
url	http://journalarticle.ukm.my/10812/ http://journalarticle.ukm.my/10812/ http://journalarticle.ukm.my/10812/1/9450-48414-1-PB.pdf
first_indexed	2023-09-18T19:58:30Z
last_indexed	2023-09-18T19:58:30Z
_version_	1777406690001420288

Islamic banks vs conventional banks in Indonesia: an analysis on financial performances

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