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An Evaluation of Financial Stress for Islamic Banks in Indonesia Using a Bankometer Model

Author

Listed:
  • Teguh Budiman

    (Faculty of Economics & Business, Universitas Padjadjaran, Indonesia. Author-2-Name: Aldrin Herwany Author-2-Workplace-Name: Faculty of Economics & Business, Universitas Padjadjaran, Indonesia. Author-3-Name: Farida Titik Kristanti Author-3-Workplace-Name: Faculty of Economics & Business, Telkom University, Bandung, Indonesia.)

Abstract

"Objective � In recent years, the market share of Indonesian Islamic banks has declined. The purpose of this study is to assess the financial distress being experienced by Islamic banks in Indonesia by using the Bankometer's score. This study will also uncover any differences between listed and non-listed Islamic banks using the Bankometer model. The Bankometer model is a model developed by the IMF (2000) to measure the financial soundness of banks. Methodology/Technique � The study uses data obtained between 2011 and 2015 using a purposive sampling model. The sample consists of 11 Islamic Banks in Indonesia. Findings � The results show that all Islamic banks are categorized as very healthy throughout the period of the research. Using and independent t-test, it is shown that there are differences between non-performing loans from listed and nonlisted Islamic banks. However, there are no significant differences between Variable Capital Asset, Equity Asset, Cost to Income and Loan to Asset. Novelty � The study uses Bankometer's score to evaluate financial distress."

Suggested Citation

  • Teguh Budiman, 2017. "An Evaluation of Financial Stress for Islamic Banks in Indonesia Using a Bankometer Model," GATR Journals jfbr130, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:jfbr130
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    References listed on IDEAS

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    1. Ohlson, Ja, 1980. "Financial Ratios And The Probabilistic Prediction Of Bankruptcy," Journal of Accounting Research, Wiley Blackwell, vol. 18(1), pages 109-131.
    2. Wruck, Karen Hopper, 1990. "Financial distress, reorganization, and organizational efficiency," Journal of Financial Economics, Elsevier, vol. 27(2), pages 419-444, October.
    3. Healy, Paul M. & Palepu, Krishna G., 2001. "Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 405-440, September.
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    Cited by:

    1. Moses O. Ouma & Gabriel N. Kirori, 2019. "Evaluating the Financial Soundness of Small and Medium-Sized Commercial Banks in Kenya: An Application of the Bankometer Model," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(6), pages 1-93, June.
    2. Farida Titik Kristanti, 2020. "Survival analysis of Indonesian banking companies," GATR Journals jfbr171, Global Academy of Training and Research (GATR) Enterprise.

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    More about this item

    Keywords

    Bankometer Model; Financial Distress; Islamic Banks.;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • G01 - Financial Economics - - General - - - Financial Crises

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