Intermediary Role Performance Analysis of Malaysian Islamic and Conventional Banks

Fauzias Mat Noor, Amir Shaharuddin, Norhaziah Nawai, Ainulashikin Marzuki, W Zainuddin Wan Abdullah

Abstract


ABSTRACT

The objective of this paper is to investigate the effect of bank specific characteristics and microeconomics variables on bank margin (NIM) which reflects the intermediary role of Islamic and conventional banks in Malaysia for the period of 2006 to 2014. By using static panel analysis, the results show that management efficiency is positively related to the bank margin for both Islamic and conventional banks. For Islamic banks, bank size and liquidity ratio have significant negative relationship on bank margin. The default risk is positively related to bank margin for Islamic banks. As for conventional bank, the non interest to total asset ratio has significant positive relationship on bank margin. Therefore, the results show that there are similarities and differences in terms of determinant factors that affect the bank margin between Islamic banks and conventional banks. These empirical results suggest an important policy on issues pertaining to how Islamic and conventional banks have to adjust the changes in the banking environment. The conventional banks have more comparative advantages specifically on management efficiency as its intermediary role performance is also not affected by size.

Keywords: Islamic banks; conventional banks; macroeconomics variables; econometrics modelling; determinants of bank margin.

ABSTRAK

Objektif kertas penyelidikan ini adalah untuk mengetahui kesan ciri-ciri khusus bank dan faktor mikroekonomi terhadap margin bank yang mempengaruhi peranan bank Islam dan konvensional dalam sistem perantara perbankan di Malaysia bagi tempoh 2006 hingga 2014. Dengan menggunakan analisis panel statik, hasil menunjukkan bahawa kecekapan pengurusan adalah positif terhadap margin bank untuk kedua-dua bank Islam dan konvensional. Bagi bank Islam, saiz bank dan nisbah kecairan mempunyai hubungan negatif yang signifikan terhadap margin bank. Risiko kegagalan pembayaran adalah positif terhadap margin bank bagi bank Islam. Bagi bank konvensional, nisbah faedah kepada nisbah aset keseluruhan mempunyai hubungan positif yang signifikan terhadap margin bank. Oleh itu, keputusan menunjukkan bahawa terdapat persamaan dan perbezaan dari segi faktor penentu yang mempengaruhi margin bank antara perbankan Islam dan perbankan konvensional. Keputusan empirikal ini mencadangkan satu dasar penting mengenai isu-isu yang berkaitan bagaimana bank-bank Islam dan konvensional mesti menyesuaikan perubahan dalam persekitaran perbankan. Bank-bank konvensional mempunyai lebih banyak kelebihan perbandingan khususnya terhadap kecekapan pengurusan dengan prestasinya sebagai perantara perbankan juga tidak dipengaruhi oleh faktor saiz.

Kata kunci: Perbankan Islam; perbankan konvensional; pembolehubah makroekonomi; model ekonometrik; faktor-faktor margin bank


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