Competition and bank stability in the MENA region: The moderating effect of Islamic versus conventional banks

Albaity, Mohamed; Mallek, Ray Saadaoui; Noman, Abu Hanifa Md.

doi:10.1016/j.ememar.2019.01.003

Cited by 131 publications

(138 citation statements)

References 98 publications

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“…It is found that the level of financial inclusion, proxied by the number of banks' branches, has a positive effect on banks' stability in Indonesia. The result is consistent with the studies conducted by http://journal.uinjkt.ac.id/index.php/signifikan DOI: htttp://doi.org/10.15408/sjie.v9i2.15598 Neaime and Gaysset (2018) and Albaity et al, (2019) which show the positive influence of financial inclusion on financial stability. Increasing bank services through bank branches will certainly have an impact on the community that has not been reached by the bank's financial services, particularly in terms of increasing the deposits base for the banks.…”

Section: Resultssupporting

confidence: 91%

Determinants of Bank Stability in Indonesia

Kasri

Azzahra

2020

Signifikan

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This study aims to analyse the determinant of banks’ stability in Indonesia, which is very important to ensure that the country’s banking system could be more effective in supporting transmission of monetary policy and more resilient in facing financial crisis. To achieve the objective, this study collected a comprehensive dataset from 94 banks in Indonesia, covering both conventional and Islamic banks, during September 2015 - June 2019 period. The data is subsequently analysed by employing dynamic panel data model. The results show that the main factors that positively influenced banks’ stability in Indonesia are exchange rate, financial inclusion, asset returns, and credit/financing growth. However, interest rates are found to be negatively influenced the stability. The findings are expected to provide insights for policy makers and market players in ensuring that the banks’ stability could be well maintained in Indonesia. The results are also hoped to enrich literature in economics and banking, particularly in emerging markets like Indonesia.JEL Classification: G21.How to Cite:Kasri, R. A., & Azzahra, C. (2020). Determinants of Bank Stability in Indonesia. Signifikan: Jurnal Ilmu Ekonomi, 9(2), 153-166. doi: http://doi.org/10.15408/sjie.v9i2.15598.

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Section: Resultssupporting

confidence: 91%

Determinants of Bank Stability in Indonesia

Kasri

Azzahra

2020

Signifikan

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“…To measure bank stability, we use the Z-score, which is widely used in the literature (Albaity, Mallek, and Noman, 2019;Čihák and Hesse, 2010;Demirgüç-Kunt and Detragiache, 2009;Laeven and Levine, 2009;. This measure shows the distance from insolvancy (Beck, De Jonghe, and Schepens, 2013;Goetz, 2017;Leroy and Lucotte, 2017;Nurul and Worthington, 2015).…”

Section: B Dependent Variablesmentioning

confidence: 99%

Competition, Diversification, and Stability in the Indonesian Banking System

Khattak¹,

Hamid

Islam

et al. 2021

BEMP

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We examine the impact of competition and portfolio diversification on banking stability for conventional and Islamic banks in Indonesia. We find that the Islamic banking sector is less stable, when compared to the conventional banking sector. Competition in the banking sector reduces stability, while diversification enhances it. We find that competition negatively impacts the Islamic banks, but diversification has no impact on these banks. An interesting finding is that competition and diversification complement each other in enhancing the stability of the Indonesian banking sector. These findings carry an important policy implication for the banking sector of Indonesia.

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“…Some studies broadly find that competition improves bank stability in the US, the Commonwealth of Independent States (CIS), and 14 Asia-Pacific countries ( Clark et al, 2018 ; Fu et al, 2014 ; Goetz, 2018 ) . However, other studies find that more competition instead negatively affects bank stability in the Middle East and North African (MENA) countries and other economies where both Islamic and conventional banks work alongside each other ( Albaity, Mallek, & Noman, 2019 ; Azmi, Ali, Arshad, & Rizvi, 2019 ). Overall, this brief literature review shows that researchers have found different reasons for the risk-taking by banks and their financial instability, but they are not adequately clear about the underlying reasons behind the problem: Why and how a bank takes on excess risk and falls into financial instability.…”

Section: Literature and Hypothesismentioning

confidence: 99%