The Role of Efficiency Mediation in the Effect of Banks Size on Bank Profitability in Indonesia

Ruslan, Andi; Pahlevi, Cepi; Alam, Syamsu; Nohong, Mursalim

doi:10.26487/hebr.v3i1.1846

Cited by 14 publications

(15 citation statements)

References 8 publications

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“…As quoted by Ibrahim and Rizvi (2017), "we need bigger Islamic banks". This result is supported by the analysis of Amene, and Alemu (2019), Ruslan, Pahlevi, Alam, & Nohong (2019), Jaouad and Lahsen (2018), Abduh, and Idrees (2013), and Demirgüç-Kunt, and Merrouche (2010 which state that larger banks might be more efficient due to economies scale. Since the larger bank can easily diversify their assets portfolio while it reduces expenses more efficiently and effectively.…”

Section: Multivariate Results Of Mandamentioning

confidence: 72%

“…Similarly, Abduh, and Idrees (2013) has found a negative relationship between bank size and performance. On the contrary, Nafti et al (2017), and Ruslan, Pahlevi, Alam, & Nohong (2019) have found that bank size has a positive and significant influence on bank profitability through bank efficiency (mediating effect). Fang, C. K. Lu, Tan, & Zhang (2019) has conducted a study in Chania and found that there is a relationship between the bank's sizes and the bank's performance.…”

Section: Review Of Literaturementioning

confidence: 97%

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Impact of Mergers and Acquisitions on Operational Performance of Islamic Banking Sector

2021

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Merger and acquisition (hereafter MA) are the business expansion strategy. Islamic bank is the niche banking sector compared to its peers while it is categorized as too small to succeed. The paper aims to analyze the impact of MA on the operational performance of the Islamic banking sector. This study employs empirical research methods, namely cross-sectional pooled regression and panel data regression to analyze a set of samples consisting of 10 Islamic banks involved in MA from 6 countries, drawn from the International Monetary Fund (IMF), World bank, Ficth Connect, and Bloomberg over the years of 2009Q1to 2018Q4. The operational performance is estimated using accounting-based measures while the Herfindahl-Hirschman Index (HHI) and the concentration ratio (CR) are applied to signify market structure. Total assets, total deposits, and operating income variables are used to represent bank size. The findings indicate that bank size shows a negative impact on operational performance. While the segregated level of bank size which is larger banks and concentrated market structure has a greater impact on the operational performance of Islamic banks in the post-MA period. The paper concludes by discussing policy implications for policymakers and academicians for having the strategic decision on the MA deal and further research.

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Section: Multivariate Results Of Mandamentioning

confidence: 72%

Section: Review Of Literaturementioning

confidence: 97%

Impact of Mergers and Acquisitions on Operational Performance of Islamic Banking Sector

2021

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“…The findings of this study are in line with the findings of previous studies in the context of banks, both Islamic banks and conventional banks. Efficiency affects profitability [2], [3], [4], [5], [6], [7], [8]. Bank efficiency has a positive effect on bank profitability.…”

Section: Resultsmentioning

confidence: 99%

Efficiency, Risk and Profitability of Islamic Banks: Under Pressure in the Competition of the Banking Industry in Indonesia

Haryanto

2020

KSS

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This study analyses the factors that affect the profitability of Islamic banks in Indonesia. The independent variables consists of efficiency,risk, liquidity,CAR,and macroeconomic conditions:GDP andinflation.Thedependentvariableisprofitability.This research was conducted in the Islamic banking industry in Indonesia. The research uses quarterly data from 2006-2019. The purpose of this study is to analyse the effect of efficiency, risk, liquidity, capital, and macroeconomic conditions on the profitability of Islamic banks in Indonesia. Data analysis techniques used multiple regression. The results showed that the efficiency and risk had a positive effect on profitability. Inflation has a negative effect on profitability. While liquidity, CAR, and GDP do not affect the profitability of Islamic banks. Keywords: Islamic bank; Financing; Net Operating Margin; Profitability.

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“…ROA is the ratio of net income divided by total assets of the bank where ROE is the ratio of net income by shareholders' equity. Ruslan et al (2019) and Robin et al (2018) point out that ROA is a measure of bank profitability which focuses on the bank's ability to earn income from its operations. ROE reflects how effectively a bank management is using shareholders' funds based on total equity (Kennedy, 2019;Ommeren, 2011).…”

Section: Datamentioning

confidence: 99%

Money creation process, banking performance and economic policy uncertainty: evidence from Tunisian listed banks

Khalfaoui

Derbali

2021

IJSE

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PurposeThis paper aims to investigate the relationship between money creation process and banking performance for Tunisian listed banks, particularly in the context of increased economic policy uncertainty.Design/methodology/approachIn the relevant literature, there are two theories of money creation. The theory of money creation out of nothing, by using the central bank for refinancing and the theory of financial intermediation, from which money creation is made from preexisting savings. In this paper, the authors utilize a panel data for a sample composed of 11 Tunisian banks during the period of study from 1999 to 2019.FindingsThe study’s empirical analysis show that both forms of money creation have a positive impact on bank profitability as measured by the return on assets (ROA) and return on equity (ROE) ratios. However, the same analysis shows that the channel of money creation out of nothing is the most profitable for banks. Also, the authors show that economic policy uncertainty negatively influences the relationship between money creation and banking profitability only when credit creation is derived from savings.Originality/valueThis paper contributes to the literature by explaining the nexus between money creation and Tunisian banking performance which depends on the implementation of stable and conducive economic and political environment. Also, this link requires the implementation of monetary measures to encourage savings and develop an efficient capital market and judicious monetary policy enabling the central bank to inject more liquidity into the economy.

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The Role of Efficiency Mediation in the Effect of Banks Size on Bank Profitability in Indonesia

Cited by 14 publications

References 8 publications

Impact of Mergers and Acquisitions on Operational Performance of Islamic Banking Sector

Impact of Mergers and Acquisitions on Operational Performance of Islamic Banking Sector

Efficiency, Risk and Profitability of Islamic Banks: Under Pressure in the Competition of the Banking Industry in Indonesia

Money creation process, banking performance and economic policy uncertainty: evidence from Tunisian listed banks

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