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Determinants Analysis Of Islamic And Conventional Banks Systemic Risk Potentiality: A Preliminary Study

Author

Listed:
  • RAHMADANA Muhammad Fitri

    (Universitas Negeri Medan, Sumatera Utara, Indonesia)

  • SAGALA Gaffar Hafiz

    (Universitas Negeri Medan, Sumatera Utara, Indonesia)

Abstract

This study aims to analyze the determinants of systemic risk in Islamic and conventional banks. The population of this research is Islamic and conventional banks, which are listed on the Indonesia Stock Exchange. Researchers used purposive sampling to ensure the suitability of the sample with the research objectives. Furthermore, we use secondary data obtained from financial databases such as Yahoo Finance and the Indonesia Stock Exchange. This study adopts the systemic risk measurement offered by Fiordelisi and Marquez-Ibanez (2013). The determinants of systemic risk were explored from the six independent variables, namely the bank efficiency, business model, size, interest rate, GDP, and bank categories (Islamic or conventional). Data analysis was performed with panel data regression. The results indicate that size is the critical factor in determining potential systemic risk for banks, both Islamic and conventional banks. This study contributes theoretically in constructing theoretical frameworks related to the stability and resilience of Islamic banks in comparison with conventional banks. Practically this study seeks to produce recommendations for improvement of Islamic banking financial governance as an alternative to conventional banking.

Suggested Citation

  • RAHMADANA Muhammad Fitri & SAGALA Gaffar Hafiz, 2022. "Determinants Analysis Of Islamic And Conventional Banks Systemic Risk Potentiality: A Preliminary Study," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 17(1), pages 202-217, April.
    • Handle: RePEc:blg:journl:v:17:y:2022:i:1:p:202-217
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    References listed on IDEAS

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    3. Freixas, Xavier & Parigi, Bruno M & Rochet, Jean-Charles, 2000. "Systemic Risk, Interbank Relations, and Liquidity Provision by the Central Bank," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(3), pages 611-638, August.
    4. Mariani Abdul-Majid & David Saal & Giuliana Battisti, 2010. "Efficiency in Islamic and conventional banking: an international comparison," Journal of Productivity Analysis, Springer, vol. 34(1), pages 25-43, August.
    5. Maher Hasan & Jemma Dridi, 2011. "The Effects Of The Global Crisis On Islamic And Conventional Banks: A Comparative Study," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 163-200.
    6. Hoggarth, Glenn & Reis, Ricardo & Saporta, Victoria, 2002. "Costs of banking system instability: Some empirical evidence," Journal of Banking & Finance, Elsevier, vol. 26(5), pages 825-855, May.
    7. Lehar, Alfred, 2005. "Measuring systemic risk: A risk management approach," Journal of Banking & Finance, Elsevier, vol. 29(10), pages 2577-2603, October.
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