INCOME STRUCTURE AND PERFORMANCE: AN EMPIRICAL ANALYSIS OF ISLAMIC AND CONVENTIONAL BANKS IN INDONESIA

Authors

Mohsin Ali, Taylor’s University - Malaysia
Mudeer Ahmed Khattak, Universiti Kuala Lumpur - Malaysia

Document Type

Article

Abstract

Banks have tried to compensate for the decline in their profits due to increased competition by shifting their focus toward non-intermediation activities. This paper assesses the impact of these non-intermediation activities on the profitability and risk of Islamic and conventional banks in Indonesia. We use a system generalized method of moments estimator to control for the simultaneity for all the banks in our sample for the period from 2007 to 2017. Our results suggest that non-intermediation income has a positive impact on bank performance. We find no difference between Islamic and conventional banks in terms of the link between non intermediation income and performance.

Recommended Citation

Ali, Mohsin and Khattak, Mudeer Ahmed (2020) "INCOME STRUCTURE AND PERFORMANCE: AN EMPIRICAL ANALYSIS OF ISLAMIC AND CONVENTIONAL BANKS IN INDONESIA," Bulletin of Monetary Economics and Banking: Vol. 23: No. 0, Article 2.
DOI: https://doi.org/10.21098/bemp.v23i0.1193
Available at: https://bulletin.bmeb-bi.org/bmeb/vol23/iss0/2

First Page

87

Last Page

108

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Malaysia

Affiliation

Taylor’s University