A Comparative Analysis between Islamic Banks and Conventional Banks in Indonesia Before and After Global Financial Crisis

Lina Nugraha Rani, Eko Fajar Cahyono

Abstract

The objective of this study is to elaborate the comparison and examine the stability level between Islamic and conventional banks operational in Indonesia during the period of before and after Global Financial Crisis (GFC). The impact of Global Financial Crisis on Islamic and conventional banks was analyzed using the tests of IRF (Impulse Response Function) and Variance Decomposition Analysis (VDA) which existed in the VAR (Vector Autoregressive) Method. The pre (GFC) period used in this study is between January 2003 and July 2007, whereas the post GFC is between August 2007 and December 2016. The results of this study are that Conventional and Islamic Banks   are affected by macroeconomic conditions and macroeconomic turmoil in the period before and after the global financial crisis. The results of contrasting research are the responses and the effect of macroeconomic indicators on banks higher pre the GFC occurs than after the occurrence of GFC.

Keywords

GFC, Financing, Deposit, Macroeconomic Indicators

Full Text:

PDF

References

AJIJA, SHOCHRUL ROHMATUL. 2011. Cara Cerdas Menguasai EViews. Jakarta: Penerbit Salemba Empat.

BANK INDONESIA. 2009. Outlook Ekonomi Indonesia: Krisis Finansial Global dan Dampaknya terhadap Perekonomian Indonesia. Januari 2009. Economic Research Bureau, Directorate of Economic Research and Monetary Policy.

BECK, T., DEMIRGÜÇ-KUNT, A. & MERROUCHE, O. 2010. Islamic vs. conventional banking: Business model, efficiency and stability, The World Bank.

FATWA DSN MUI No. 07/ DSN-MUI/ IV/2000 Concerning Mudharabah Financing. Dated April 4, 2000.

KAMINSKY, G. L. & REINHART, C. M. 1999. The twin crises: the causes of banking and balance-of-payments problems. American economic review, 89, 473-500.

KASSIM, S. H. & SHABRI ABD. MAJID, M. 2010. Impact of financial shocks on Islamic banks: Malaysian evidence during 1997 and 2007 financial crises. International Journal of Islamic and Middle Eastern Finance and Management, 3, 291-305.

NORGREN, C. 2010. The causes of the global financial crisis and their implications for supreme audit institutions. Auditor General of the Swedish National Audit Office Stockholm.

OTHMAN, R., ARIS, N. A., AZLI, R. M. & ARSHAD, R. 2012. Islamic banking: the firewall against the global financial crisis. Journal of Applied Business Research, 28, 9.

INDONESIA FINANCIAL SERVICES AUTHORITY. 2015. Roadmap of Indonesian Islamic Banking 2015 - 2019. Department of Islamic Banking.

INDONESIA FINANCIAL SERVICES AUTHORITY. 2017. Indonesian Banking Booklet 2017. Department of Banking Licensing and Information of the Financial Services Authority.

PESARAN, H. H. & SHIN, Y. 1998. Generalized impulse response analysis in linear multivariate models. Economics letters, 58, 17-29.

SIMS, C. A. 1986. Are forecasting models usable for policy analysis? Quarterly Review, 2-16.

TLEMSANI, I. & AL SUWAIDI, H. 2016. Comparative analysis of Islamic and Conventional Banks in the UAE during the financial crisis. Asian Economic and Financial Review, 6, 298.

ZAIDI, M. A. S., KARIM, Z. A. & KEFELI, Z. 2005. Financial Sector Development, Government Size, Trade Openness and Economic Growth: An Emperical Analysis in ASEAN-4 Countries. Economic Journal of Emerging Markets, 10.

DOI: http://dx.doi.org/10.7454/efi.v64i2.589

Refbacks

  • There are currently no refbacks.