Influence of bank specific factors, market concentration and macroecomic indicators towards Islamic and conventional banks stability in Indonesia

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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Main Author: Nunung Aini Rahmah
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Language:eng
Published: 2023
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HG Finance
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Nunung Aini Rahmah
Influence of bank specific factors, market concentration and macroecomic indicators towards Islamic and conventional banks stability in Indonesia
description <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>
format thesis
qualification_name
qualification_level Doctorate
author Nunung Aini Rahmah
author_facet Nunung Aini Rahmah
author_sort Nunung Aini Rahmah
title Influence of bank specific factors, market concentration and macroecomic indicators towards Islamic and conventional banks stability in Indonesia
title_short Influence of bank specific factors, market concentration and macroecomic indicators towards Islamic and conventional banks stability in Indonesia
title_full Influence of bank specific factors, market concentration and macroecomic indicators towards Islamic and conventional banks stability in Indonesia
title_fullStr Influence of bank specific factors, market concentration and macroecomic indicators towards Islamic and conventional banks stability in Indonesia
title_full_unstemmed Influence of bank specific factors, market concentration and macroecomic indicators towards Islamic and conventional banks stability in Indonesia
title_sort influence of bank specific factors, market concentration and macroecomic indicators towards islamic and conventional banks stability in indonesia
granting_institution Universiti Pendidikan Sultan Idris
granting_department Fakulti Pengurusan dan Ekonomi
publishDate 2023
url https://ir.upsi.edu.my/detailsg.php?det=9945
_version_ 1804890528326615040
spelling oai:ir.upsi.edu.my:99452024-03-21 Influence of bank specific factors, market concentration and macroecomic indicators towards Islamic and conventional banks stability in Indonesia 2023 Nunung Aini Rahmah HG Finance <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> 2023 thesis https://ir.upsi.edu.my/detailsg.php?det=9945 https://ir.upsi.edu.my/detailsg.php?det=9945 text eng closedAccess Doctoral Universiti Pendidikan Sultan Idris Fakulti Pengurusan dan Ekonomi <p>Abdullah S. Mohammed S. A. & Muhammed J (2017). The relationship between agency theory, stakeholder theory and Shariah supervisory board in Islamic banking: An attempt towards discussion, Humanomics. 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