INCOME STRUCTURE AND PERFORMANCE: AN EMPIRICAL ANALYSIS OF ISLAMIC AND CONVENTIONAL BANKS IN INDONESIA

  • Mohsin Ali Taylor's university
  • Mudeer Ahmed Khattak Universiti Kuala Lumpur
Keywords: Profitability, Risk, Non-intermediation income, Indonesia

Abstract

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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Published
2020-01-31
How to Cite
Ali, M., & Khattak, M. (2020). INCOME STRUCTURE AND PERFORMANCE: AN EMPIRICAL ANALYSIS OF ISLAMIC AND CONVENTIONAL BANKS IN INDONESIA. Buletin Ekonomi Moneter Dan Perbankan, 23, 87 - 108. https://doi.org/10.21098/bemp.v23i0.1193