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

Norzitah Abdul Karim (), Syed Musa Syed Jaafar Alhabshi (), Salina Kassim () and Razali Haron ()
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Norzitah Abdul Karim: Universiti Teknologi MARA, Institute of Islamic Banking and Finance (IIiBF), International Islamic University Malaysia (IIUM)
Syed Musa Syed Jaafar Alhabshi: Institute of Islamic Banking and Finance (IIiBF), International Islamic University Malaysia (IIUM)
Razali Haron: Institute of Islamic Banking and Finance (IIiBF), International Islamic University Malaysia (IIUM)

Journal of Islamic Monetary Economics and Finance, 2018, vol. 3, issue 2, 1-19

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.

Keywords: Bank Stability; Z-Score; Islamic Bank; Conventional Bank; Crisis (search for similar items in EconPapers)
JEL-codes: M2 M20 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:idn:jimfjn:v:3:y:2018:i:2:p:1-19

DOI: 10.21098/jimf.v3i2.891

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