Determinants of Bank Performance: Conventional versus Islamic

Nabilah Rozzani, Rashidah Abdul Rahman

Abstract


ABSTRACT
Using CAMELS rating to measure bank performance, the present study compares the performance estimates for Islamic banks with conventional banks operating in Malaysia from 2008 to 2011. The present study further identifies the determinants affecting the performance of conventional and Islamic banks in Malaysia. Using a sample of 19 conventional banks and 16 Islamic banks, the results indicate that the levels of composite performance achieved by both conventional and Islamic banks in Malaysia are very similar. Furthermore, it is observed that the performance of conventional banks will improve following the reduction of operational costs, while the performance of Islamic banks will improve following the reduction of bank size and an increment of credit risk.

Keywords: CAMELS; bank performance; Islamic banks; conventional bank; composite performance

ABSTRAK
Dengan menggunakan pentaksiran CAMELS bagi mengukur prestasi bank, kajian ini membandingkan anggaran prestasi bagi bank-bank Islam dengan bank-bank konvensional yang beroperasi di Malaysia dari 2008 hingga 2011. Kajian ini seterusnya mengenalpasti penentu yang mempengaruhi prestasi bank-bank konvensional dan Islam di Malaysia. Dengan 19 bank konvensional dan 16 bank Islam digunakan sebagai sampel, hasil kajian menunjukkan bahawa tahap prestasi komposit yang dicapai oleh kedua-dua jenis bank konvensional dan Islam adalah hampir serupa. Selain itu, dapat dilihat dari hasil kajian bahawa prestasi bank akan menjadi lebih baik bagi bank-bank konvensional dengan penurunan kos operasi, manakala bagi bank-bank Islam, prestasi adalah lebih baik dengan penurunan saiz dan peningkatan risiko kredit.

Kata kunci:CAMELS; prestasi bank; bank Islam; bank konvensional; prestasi komposit


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