Islamic Banks vs Conventional Banks in Indonesia: An Analysis on Financial Performances

Raditya Sukmana, Nur Ahlina Febriyati



Islamic banks in Indonesia have been in existence for more than two decades. Substantial development has taken place in this largest Muslim country. Regulator, academicians, and practitioners have been providing significant support with the objective of improving the performance of the Islamic banking. Hence, it is timely to assess whether its performance differs than that of the conventional banks. This paper aims to describe and critically evaluate and compare the financial performance of Islamic banks to that of conventional banks. Data of Capital Adequacy Ratio (CAR), Return on Asset (ROA), Operational Cost/ Operational Revenue (BOPO), Non-Performing Loan (NPL) /Non Performing Financing (NPF) and Loan Deposit Ratio (LDR)/ Financing Deposit Ratio (FDR) for Islamic and conventional banks are examined. The analysis of monthly data covers the period from January 2004 to July 2014 (127 observations). Paired sampled t-test was adopted to see whether there are significant differences in the financial ratios between both banks. This study found that CAR, ROA, BOPO and NPL of conventional banks are significantly higher than that of Islamic banks but not FDR. Based on the result of capital adequacy, the findings suggest that Islamic banks need to have more capital to face the involved risk as that of conventional banks. Conventional banks need to function themselves as financial intermediaries to support the real sector as that of Islamic banks.

Keywords: Islamic banks; conventional banks; financial performances


Bank Islam di Indonesia telah wujud sejak dua puluh tahun yang lalu. Banyak perkembangan telah berlaku dalam negara Islam terbesar ini. Pembuat polisi, ahli akademik dan pengamal industri telah memberi sokongan yang padu untuk memastikan peningkatan pencapaian prestasi dalam perbankan Islam. Justeru, sekarang adalah masanya untuk menilai perbezaan prestasi di antara perbankan Islam dan perbankan konvensional. Artikel ini bertujuan untuk menerangkan, menilai dan membandingkan dengan kritikal perbezaan dalam prestasi kewangan bank Islam dan bank konvensional. Data berkaitan nisbah kecukupan modal (CAR), pulangan atas aset (ROA), kos/pendapatan operasi (BOPO), pinjaman tidak berbayar/ pembiayaan tidak berbayar (NPL), dan nisbah deposit pinjaman/ nisbah deposit pembiayaan bank Islam dan bank konvensional telah dikaji. Analisis kajian melibatkan data bulanan meliputi tempoh Januari 2004 hingga Julai 2014 (127 pemerhatian). Ujian t digunakan untuk melihat sama ada terdapat perbezaan yang signifikan dalam nisbah antara kedua-dua bank. Kajian ini mendapati CAR, ROA, BOPO dan NPL bank konvensional adalah signifikan lebih tinggi daripada bank Islam, tetapi tidak FDR. Berdasarkan keputusan kajian dalam kecukupan modal, dapatan mencadangkan bank Islam memerlukan lebih banyak modal untuk menghadapi risiko seperti bank konvensional. Bank konvensional pula perlu bertindak sebagai intermediari kewangan untuk menyokong sektor lain seperti mana bank Islam.

Kata kunci: Bank Islam; bank konvensional; prestasi kewangan

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