BANK RISK-TAKING DETERMINANT: CONVENTIONAL VS ISLAMIC BANKS EVIDENCE FROM SOUTH EAST ASIA

• Main Author: Ardy Prasetya, Refki
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/70298
• Institution: Institut Teknologi Bandung

Every year the world economy has a higher level of costs. The stability of the economy in a country can be seen from the state of its banks. Bank failure can affect the economy because of the relationship with many partners, such as the government, creditors, and others. Non-compliance with excessive ordering rules is not the cause of the banking crisis, but rather non-compliance with risk-taking rules, which is the root cause of the banking crisis. The health of the financial system is very important for Islamic banks and for conventional banks. With several characteristics that are different from conventional banking, we must pay more attention to sharia behavior, especially with regard to the banking system. The purpose of this paper is to identify various factors that can explain conventional and Islamic bank risk-taking, which have been grouped into macroeconomic factors, namely GDP and inflation, as well as bank-specific factors such as bank size, bank capital, off-balance sheet activity, listed bank, while to measure risk taking used Z-score. The data used in this study include Indonesia, Malaysia, and the Philippines, which are in the ASEAN region during the 2010-2019 period consisting of 92 conventional banks and 30 Islamic banks. This research uses panel data regression with random effect models and estimate models using both generalized least square random effect and generalized method of moments system approaches. The results show that the majority of bank-specific variables, except listed banks, influence risk-taking in conventional and Islamic banks. At the same time, macroeconomic factors determine risk-taking in conventional banks, while Islamic banks have little influence by macroeconomic determinants.