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 increasedcompetition by shifting their focus toward non-intermediation activities. This paperassesses the impact of these non-intermediation activities on the profitability and riskof Islamic and conventional banks in Indonesia. We use a system generalized methodof moments estimator to control for the simultaneity for all the banks in our samplefor the period from 2007 to 2017. Our results suggest that non-intermediation incomehas a positive impact on bank performance. We find no difference between Islamicand conventional banks in terms of the link between non-intermediation income andperformance.
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