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Type :thesis
Subject :HG Finance
Main Author :Nunung Aini Rahmah
Title :Influence of bank specific factors, market concentration and macroecomic indicators towards Islamic and conventional banks stability in Indonesia
Place of Production :Tanjong Malim
Publisher :Fakulti Pengurusan dan Ekonomi
Year of Publication :2023
Corporate Name :Universiti Pendidikan Sultan Idris
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Abstract : Universiti Pendidikan Sultan Idris
The post-global financial crisis caused banking instability and a slowdown in Indonesia’s economy. Thus, this study examines the differences in financial stability, the influencing factors during and after the global financial crisis and assess their influence on overall financial stability for Islamic and conventional banks in Indonesia. The theories involved in this study are Signaling, Legitimacy, and Banking theories. The sample is unbalanced panel data, purposively selected from 41 conventional banks and nine Islamic banks, consisting of 500 observations for ten years. Multiple regression analysis with dummy variables was used to determine the influence of bankspecific factors, market concentration, and macroeconomic indicators on Islamic and conventional banks' financial stability. The findings showed Islamic banks were more stable than conventional banks during and after the financial crisis. Further analyses showed that bank-specific factors consisting of capital adequacy (β = 21.501; p = 0.000 ) and size (β = -8.606; p = 0.000), as well as market concentration (β =75.262; p = 0.000) influenced Islamic banks' financial stability. For conventional banks' financial stability, the influencing factors were capital adequacy (β = 1.514; p = 0.000), size (β = .547; p = 0.000), profitability (β = -47.496; p = 0.033), efficiency (β = -3.778; p = 0.003), liquidity (β = 4.448; p = 0.005), credit risk (β = -52.664; p = 0.031), and market concentration (β = -31.347; p = 0.000). The implication of this study is that Islamic banks must enhance their capitalization to boost profitability. Conversely, conventional banks must improve risk assessments and adopt the current risk management technology to improve financial stability. In addition, the banking sector could capitalize on latent profit potential by expanding to other countries, taking advantage of comparably higher Islamic bank profitability.

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