A structural model of “alpha” for the capital adequacy ratios of Islamic banks

Baldwin, Kenneth; Alhalboni, Maryam; Helmi, Mohamad Husam

doi:10.1016/j.intfin.2018.12.015

Cited by 28 publications

(19 citation statements)

References 37 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Bank capital as a business entity should be used to secure against the possibility of losses caused by variations in bank assets that may be mainly driven by third-party loans such as community funds (Anwar and Murwaningsari, 2019). It is a ratio that indicates the ability of a bank to use its own capital to deal with credit risks (Baldwin et al, 2019). The ratio can be calculated from the bank's capital to its risk-weighted assets.…”

Section: Methodsmentioning

confidence: 99%

Credit Risk and Commercial Bank Performance: Evidence from ASEAN

Lew¹,

Lau²

2022

IJAREMS

View full text Add to dashboard Cite

This study aims to examine the relationship between credit risk and the performance of commercial banks in the ASEAN (Association of Southeast Asian Nations) region. 113 commercial banks across Malaysia, Singapore, Thailand, Philippines, and Vietnam are covered for analysis purposes. The study quantifies the credit risk using three commonly seen metrics i.e. capital adequacy ratio, loan to deposit ratio, and non-performing loan. Capital adequacy ratio and loan to deposit ratio could present the riskiness of the funding strategy of banks, while nonperforming loan represents the overall customer payments past due as the potential result of risk-taking behaviour. Panel data analysis covering the years 2016-2020 for the above-mentioned bank sample is employed in examining the relationships. The result indicates that all the above metrics have a significant relationship with commercial bank performance, proxied by return on equity and return on assets, largely consistent with the underlying expectations. While the risktaking behaviour may enhance the return measure of profitability, it would at the same time expose a bank to the downside risk as reflected by a higher level of non-performing loans. The study could provide empirical evidence to the managers and regulators in the region for a better understanding of banks' risks in formulating better policies to foster prudent management and decision making.

show abstract

Section: Methodsmentioning

confidence: 99%

Credit Risk and Commercial Bank Performance: Evidence from ASEAN

Lew¹,

Lau²

2022

IJAREMS

View full text Add to dashboard Cite

show abstract

“…Bank performance can be measured from several financial ratios, among others, Non-Performing Loans that describe the quality of bank assets, in this case, the level of problem loans. Loan to Deposit Ratio, which is one of the achievements in measuring liquidity, and Capital Adequacy Ratio, which describes the ratio of adequacy of the bank's capital (Yrigoy, 2018;Baldwin, Alhalboni, & Helmi, 2019;Choerudin & Achmad, 2016).…”

Section: Introductionmentioning

confidence: 99%

Effect of CAR and NPL on ROA: Empirical Study in Indonesia Banks

Tangngisalu¹,

Hasanuddin²,

Hala³

et al. 2020

JAFEB

View full text Add to dashboard Cite

This study seeks to analyze the effect of Non-Performing Loans and Capital Adequacy Ratio on Return on Assets on ten conventional banks listed on the Indonesia Stock Exchange (BEI-IDX). This study uses secondary panel data for 2015-2019 in the form of CAR and NPL values from ten conventional banks listed on the BEI-IDX during the 2020 observation period. The research approach is quantitative descriptive with data analysis methods, namely, linear regression. The testing phase of this study includes: transform value, F-test, T-test and hypothesis test with significancy level sig < 0.05. The results of this study reveal that Non-Performing Loans had a significant negative effect (t =-2,637) (0.011 <0.0) on Return on Assets, while Capital Adequacy Ratio has no significant effect on ROA (0.760 > 0.05). R2 value is 0.128 or 12.8%. It has a significant effect on variables, calling efforts by banks, governments, and authorities monetary of related institutions to maintain the stability of finance. The reduction of Non-Performing Loan impacts on assets and capital adequacy ratio, besides, the normal NPL will control the stability of finance. If a balance is created either in the form of values or amounts of the variables, the reduction in Non-Performing Loans will be controlled.

show abstract

“…The regulator's aim has been to match risk-based capital requirements to the real risk of banks (Abou-el-sood, 2016). Conclude that a higher capital adequacy ratio may also reduce the incentive of banks to take on excessive risk (Baldwin et al, 2019). CAR ratio affects the performance of banks in India (Kumar et al, 2012).…”

Section: Capital Adequacy Ratio (Car)mentioning

confidence: 99%

The Financial Performance Comparation of Private and Government Bank: Rural Bank Case

Widia

Prananta

2021

MAJ

View full text Add to dashboard Cite

The purpose of establishing rural bank/ Bank Perkreditan Rakyat known as BPR is to improve the regional economy through credit as financial support for inclusive society. Meanwhile, the contribution of BPR/BPRS (Conventional/Sharia) owned by the Local Government to the regional economy is still small in number. It reflected in the share of productive loans/financing channeled by Local Government BPR lower than private BPR/BPRS. This study aims to Analyze Performance Difference in Private Rural Banks and Rural Banks Owned by Local Government in Central Java Province using financial performance ratios. The financial performance ratios were Capital Adequacy Ratio (CAR), Quality of earning assets, Non-Performing Loan (NPL), Loan to Deposit Ratio (LDR), and Return on Assets (ROA). The method used to analyze data is Different Tests using Independent T-test. This study used SPSS Version 23 analysis tool. The sample of this research is BPR owned by Local Government of Central Java, and Private owned BPR in Central Java Province from 2016 to 2019. Selection of sample by using purposive sampling. Based on Independent T-Test, there is a difference in the ratio of Quality of earning assets and LDR between BPR owned by Local Government and Private Rural Bank, while for the ratio of NPL, CAR, and ROA there is no difference.

show abstract

A structural model of “alpha” for the capital adequacy ratios of Islamic banks

Cited by 28 publications

References 37 publications

Credit Risk and Commercial Bank Performance: Evidence from ASEAN

Credit Risk and Commercial Bank Performance: Evidence from ASEAN

Effect of CAR and NPL on ROA: Empirical Study in Indonesia Banks

The Financial Performance Comparation of Private and Government Bank: Rural Bank Case

Contact Info

Product

Resources

About