Efficiency, stability and asset quality of Islamicvis-à-visconventional banks

Muhammad Rizky Prima Sakti and Azhar Mohamad

Journal of Islamic Accounting and Business Research, 2018, vol. 9, issue 3, 378-400

Abstract: Purpose - This paper aims to examine how Indonesian Islamic banks differ from conventional banks in terms of their business model, asset quality, stability and efficiency. Design/methodology/approach - Based on data from 2008 to 2012, the authors uset-test,z-score and data envelopment analysis (DEA) to assess the business model, as well as the asset quality, stability and efficiency of both the Islamic and conventional banks. Findings - The results indicate that there are significant differences between the two – Islamic banks appear to not follow the conventional business model. Secondly, Islamic banks seem to have better asset quality and to be more stable than their conventional counterparts. Originality/value - Finally, the DEA results also indicate that Islamic banks are relatively more efficient than conventional banks, as shown by their higher overall efficiency, as well as technical efficiency.

Keywords: Indonesia; Stability; Efficiency; Islamic banks; Asset quality (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jiabrp:jiabr-07-2015-0031

DOI: 10.1108/JIABR-07-2015-0031

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