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Efficiency, stability and asset quality of Islamicvis-à-visconventional banks

Author

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  • Muhammad Rizky Prima Sakti
  • Azhar Mohamad

Abstract

Purpose - This paper aims to examine how Indonesian Islamic banks differ from conventional banks in terms of their business model, asset quality, stability and efficiency. Design/methodology/approach - Based on data from 2008 to 2012, the authors uset-test,z-score and data envelopment analysis (DEA) to assess the business model, as well as the asset quality, stability and efficiency of both the Islamic and conventional banks. Findings - The results indicate that there are significant differences between the two – Islamic banks appear to not follow the conventional business model. Secondly, Islamic banks seem to have better asset quality and to be more stable than their conventional counterparts. Originality/value - Finally, the DEA results also indicate that Islamic banks are relatively more efficient than conventional banks, as shown by their higher overall efficiency, as well as technical efficiency.

Suggested Citation

  • Muhammad Rizky Prima Sakti & Azhar Mohamad, 2018. "Efficiency, stability and asset quality of Islamicvis-à-visconventional banks," Journal of Islamic Accounting and Business Research, Emerald Group Publishing Limited, vol. 9(3), pages 378-400, May.
  • Handle: RePEc:eme:jiabrp:jiabr-07-2015-0031
    DOI: 10.1108/JIABR-07-2015-0031
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