Influence of bank specific factors, market concentration and macroecomic indicators towards Islamic and conventional banks stability in Indonesia
<p>The post-global financial crisis caused banking instability and a slowdown in</p><p>Indonesias economy. Thus, this study examines the differences in financial stability,</p><p>the influencing factors during and after the global...
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| Format: | thesis |
| Language: | eng |
| Published: |
2023
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| Subjects: | |
| Online Access: | https://ir.upsi.edu.my/detailsg.php?det=9945 |
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| Summary: | <p>The post-global financial crisis caused banking instability and a slowdown in</p><p>Indonesias economy. Thus, this study examines the differences in financial stability,</p><p>the influencing factors during and after the global financial crisis and assess their</p><p>influence on overall financial stability for Islamic and conventional banks in Indonesia.</p><p>The theories involved in this study are Signaling, Legitimacy, and Banking theories.</p><p>The sample is unbalanced panel data, purposively selected from 41 conventional banks</p><p>and nine Islamic banks, consisting of 500 observations for ten years. Multiple</p><p>regression analysis with dummy variables was used to determine the influence of bankspecific</p><p>factors, market concentration, and macroeconomic indicators on Islamic and</p><p>conventional banks' financial stability. The findings showed Islamic banks were more</p><p>stable than conventional banks during and after the financial crisis. Further analyses</p><p>showed that bank-specific factors consisting of capital adequacy ( = 21.501; p = 0.000</p><p>) and size ( = -8.606; p = 0.000), as well as market concentration ( =75.262; p =</p><p>0.000) influenced Islamic banks' financial stability. For conventional banks' financial</p><p>stability, the influencing factors were capital adequacy ( = 1.514; p = 0.000), size (</p><p>= .547; p = 0.000), profitability ( = -47.496; p = 0.033), efficiency ( = -3.778; p =</p><p>0.003), liquidity ( = 4.448; p = 0.005), credit risk ( = -52.664; p = 0.031), and market</p><p>concentration ( = -31.347; p = 0.000). The implication of this study is that Islamic</p><p>banks must enhance their capitalization to boost profitability. Conversely, conventional</p><p>banks must improve risk assessments and adopt the current risk management</p><p>technology to improve financial stability. In addition, the banking sector could</p><p>capitalize on latent profit potential by expanding to other countries, taking advantage</p><p>of comparably higher Islamic bank profitability.</p> |
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