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Performance of conventional banks vs. Islamic banks: evidence from Indonesia

Author

Listed:
  • Nevi Danila
  • Yousef Shahwan
  • Adeastri Aulia

Abstract

A sound banking system is crucial for the stability of the economy. This paper investigates the determinants of bank performance from the bank-specific and macroeconomic perspective. A fixed-effects model is used to analyse panel data on conventional and Islamic banks from 2010 to 2016. The data reveals that of the top ten private and non-government owned banks, an Islamic bank ranks as the number one performing bank. Macroeconomic variables are the only variables to have an impact on bank performance for both conventional and Islamic banks. While bank-specific variables do not influence performance, operating efficiency was shown to have an impact on Islamic banks.

Suggested Citation

  • Nevi Danila & Yousef Shahwan & Adeastri Aulia, 2022. "Performance of conventional banks vs. Islamic banks: evidence from Indonesia," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 12(2), pages 202-215.
    • Handle: RePEc:ids:afasfa:v:12:y:2022:i:2:p:202-215
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