INCOME STRUCTURE AND PERFORMANCE: AN EMPIRICAL ANALYSIS OF ISLAMIC AND CONVENTIONAL BANKS IN INDONESIA
Banks have tried to compensate for the decline in their profits due to increased competition by shifting their focus toward non-intermediation activities. This paper assesses the impact of these non-intermediation activities on the profitability and risk of Islamic and conventional banks in Indonesia. We use a system generalized method of moments estimator to control for the simultaneity for all the banks in our sample for the period from 2007 to 2017. Our results suggest that non-intermediation income has a positive impact on bank performance. We find no difference between Islamic and conventional banks in terms of the link between non intermediation income and performance.
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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Buletin Ekonomi Moneter dan Perbankan / Bulletin of Monetary Economics and Banking is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.