A comparative study of financial performance of Islamic banks and conventional banks in Indonesia
The paper compared and examined financial performance of Islamic banks against conventional banks before and after the enactment of Indonesia’s Islamic Banking Act No. 21/2008. The law aims to strengthen the regulatory environment for further growth of Indonesia’s market Islamic finance. The data...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
2011
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| Subjects: | |
| Online Access: | http://eprints.unisza.edu.my/3146/1/FH02-FESP-18-14893.pdf http://eprints.unisza.edu.my/3146/ |
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| Summary: | The paper compared and examined financial performance of Islamic banks against conventional banks before
and after the enactment of Indonesia’s Islamic Banking Act No. 21/2008. The law aims to strengthen the
regulatory environment for further growth of Indonesia’s market Islamic finance. The data was based on
selected financial statements of Islamic commercial banks in Indonesia from year 2000 to 2007. Financial
performance measures were expressed in terms of various financial ratios in which were categorized into
profitability, liquidity, risk and solvency and efficiency. To test the hypotheses, Mann-Whitney was employed
to compare financial performance of Islamic banks and conventional banks. In general, the study found no
major difference in financial performance between Islamic banks and conventional banks, except in terms of
its liquidity. This indicated that Islamic banks are generally more liquid as compared to conventional ones. |
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