Efficiency, stability and asset quality of Islamic vis-à-vis conventional banks: evidence from Indonesia

• Main Authors: Sakti, Muhammad Rizky Prima, Mohamad, Azhar
• Format: Article
• Language: English; English; English
• Published: Emerald Group Publishing Ltd. 2018
• Subjects: HG3368 Islamic Banking and Finance
• Online Access: http://irep.iium.edu.my/64515/1/64515_Efficiency%2C%20stability%20and%20asset%20quality.pdf; http://irep.iium.edu.my/64515/2/64515_Efficiency%2C%20stability%20and%20asset%20quality_SCOPUS.pdf; http://irep.iium.edu.my/64515/13/64515%20Efficiency%2C%20stability%20and%20asset%20quality%20of%20Islamic%20vis-%C3%A0-vis%20conventional%20banks_wos.pdf; http://irep.iium.edu.my/64515/; https://www.emeraldinsight.com/doi/full/10.1108/JIABR-07-2015-0031
• Institution: Universiti Islam Antarabangsa Malaysia

urpose – 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 use t-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.