THE ISLAMIC BANKING AND THE ECONOMIC INTEGRATION IN ASEAN

Solihin (), Noer Azam Achsani () and Imam T. Saptono ()
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Solihin: Bogor Agricultural University
Noer Azam Achsani: Bogor Agricultural University
Imam T. Saptono: Bank BNI Syariah

Bulletin of Monetary Economics and Banking, 2016, vol. 19, issue 1, 81-106

Abstract: The efficiency level of the banking industry is the most important indicator to identify the soundness of banking system. This paper use non parametric frontier approach, DEA, to analyze the Islamic bank efficiency in ASEAN. We use price of deposit from customers, deposits and placements of banks, labor, and others operational expenditures as control variabel, and using financing, deposits and placements on other insitution, securities, others investment as output variabel. We found that the mix bank is the most efficient group within the observation period. Furthermore, the average Islamic banking efficiency in Indonesia, on intermediation approach, is lower than the average of ASEAN, unless they can reduce the cost of labor and other operational expenses. This paper also examines the determinant of efficiency of the Islamic Banking in ASEAN. Internal factors are Total Aset, ROA, BOPO, and ETA, and external faktor are Market Power and Inflation. Using Tobit regression, the result shows the factors that most influence to the Islamic banking efficiency in Indonesia is the total size of the bank or its assets, OPEX/OR, and Market Power.

Keywords: ASEAN; Bank Efficiency; DEA; Islamic Banking (search for similar items in EconPapers)
JEL-codes: C14 F65 G21 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:19:y:2016:i:1d:p:81-106

DOI: 10.21098/bemp.v19i1.601

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