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The Islamic Banking And The Economic Integration In Asean

Author

Listed:
  • Solihin

    (Bogor Agricultural University)

  • Noer Azam Achsani

    (Bogor Agricultural University)

  • Imam T. Saptono

    (Bank BNI Syariah)

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.

Suggested Citation

  • Solihin & Noer Azam Achsani & Imam T. Saptono, 2016. "The Islamic Banking And The Economic Integration In Asean," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 19(1), pages 1-26, July.
    • Handle: RePEc:idn:journl:v:19:y:2016:i:1d:p:1-26
    DOI: https://doi.org/10.21098/bemp.v19i1.601
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    Citations

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    Cited by:

    1. Mohammad Abdul Matin Chowdhury & Razali Haron, 2021. "The efficiency of Islamic Banks in the Southeast Asia (SEA) Region," Future Business Journal, Springer, vol. 7(1), pages 1-16, December.
    2. Salisu, Afees A. & Ndako, Umar B. & Adediran, Idris A. & Swaray, Raymond, 2020. "A fractional cointegration VAR analysis of Islamic stocks: A global perspective," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    3. Rizvi, Syed Aun R. & Narayan, Paresh Kumar & Sakti, Ali & Syarifuddin, Ferry, 2020. "Role of Islamic banks in Indonesian banking industry: an empirical exploration," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).

    More about this item

    Keywords

    ASEAN; Bank Efficiency; DEA; Islamic Banking;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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