Financial Performance of Islamic and Conventional Banks in Malaysia: A Comparative Analysis

This paper analyses the financial performance of Islamic (IB) and conventional banks (CB) in Malaysia comparatively, within the scope of a dual setting arrangement in the Malaysian financial industry. Performance evaluation of both types of banks relies on ratio analyses which include Return on Equity (ROE), Return on Assets (ROA), Earnings per Share (EPS) and Debt Ratio. Data for this study covers four full-fledged IBs and four CBs in the period between 2012 and 2016. Based on statistical analysis (t-test and correlation analysis), the average of ROE was 6% for IBs and 14% for CBs. Results of t-test reveals that this higher performance of CBs is significant (t-test=1.957, p-value= 0.029). Furthermore, both ROA and EPS were significantly different between the two groups at p-value less than 1%. These results indicate that the Malaysian CBs performed better than IBs, at least for the banks included in this study. In terms of debt ratio, (the percentage of liabilities to total assets), IBs carry more debts than CBs. The risk of this higher debt is that the bank may be at risk of bankruptcy and may not be able to pay its obligations on time. The difference between the average debt of the two groups is significant at less than 5% (t-test= -2.251, p-value= 0.015). Therefore, not only is IBs’ performance inferior to CBs but their debt ratio is also higher. This research has implications for IBs; they should further improve their performance to become more competitive in the current environment for the financial industry. More importantly, IBs need to uphold Islamic ethics throughout their business operations to ensure that both the stated principles and subsequent objectives are achieved.

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Financial Performance of Banks in Lebanon: Conventional vs Islamic

International Business Research ◽

10.5539/ibr.v12n2p40 ◽

2019 ◽

Vol 12 (2) ◽

pp. 40 ◽

Cited By ~ 1

Author(s):

Boutheina HASHEM ◽

Hiyam SUJUD

Keyword(s):

Regression Analysis ◽

Financial Performance ◽

Banking Industry ◽

Bank Performance ◽

Islamic Banking ◽

Islamic Banks ◽

Return On Assets ◽

Return On Equity ◽

The Difference ◽

Conventional Banks

This study compares the performance of Islamic and conventional banking in Lebanon in terms of Return on Assets and Return on Equity over the period 2012-2016. Moreover, it examines whether the internal characteristics of the bank may explain the difference in profitability between two types of banking transactions. In addition, the results of the study are analyzed using a regression analysis applied to a sample of both Islamic and conventional banks to investigate the effects of these variables on bank performance. Furthermore, results show that Islamic banks in Lebanon have better asset adequacy compared to conventional banks. However, conventional banks are better in liquidity and are on an average more profitable than Islamic ones. It is worthy to indicate that the Islamic banking industry in Lebanon is still in its infancy and only very few of the banks were active in this sector.

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Risk disclosure and financial performance: the case of Islamic and conventional banks in the GCC

Journal of Islamic Accounting and Business Research ◽

10.1108/jiabr-11-2020-0343 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Ayman E. Haddad ◽

Hussain Alali

Keyword(s):

Financial Performance ◽

United Arab Emirates ◽

Best Practice ◽

Annual Reports ◽

Risk Disclosure ◽

Return On Assets ◽

Content Type ◽

Return On Equity ◽

Gcc Countries ◽

Conventional Banks

Purpose This study aims to explore the extent of risk disclosure (RD) among conventional banks (CBs) and Islamic banks (IBs) listed on stock markets in the Gulf cooperation council (GCC). It also examines the influence of RD on the banks’ financial performance as measured by return on assets (ROA) and return on equity (ROE). Design/methodology/approach This study uses content analysis to examine RD in the annual reports of 16 CBs and 14 IBs in the GCC for a sample of 240 firm-year observations over the period 2007 to 2014. Findings The study shows no significant differences between the RD reported in the annual reports of CBs and that of IBs. On average, a CB reported 234 sentences while an IB disclosed 244 sentences of RD in its annual report. The authors also find that both types of banks had an upward trend over the periods. While the means of RD reported by CBs have significantly improved over the period, the RD reported by IBs has not. Similar results are also found when the authors compared the RD pre- and post-financial crisis period. Finally, the authors find that there is a significant association between RD and both models of financial performance (ROA and ROE) for IBs, after controlling other variables. However, RD has a significant association with only ROE for CBs. Research limitations/implications The bank selection was restricted to publicly traded banks in the GCC. Other financial institutions and different types of industries were not considered. Further research could determine whether the results obtained in this study could be generalized to different industries in the GCC and or in other countries. Practical implications This study provides evidence on the significant association between RD and the financial performance of CBs and IBs in GCC countries. This study could be helpful to regulatory authorities in encouraging banks to adopt the best practice of RD and thus promote banks’ transparency. Originality/value This is the first known study to examine the RD practices of both types of banks and their association with banks’ financial performance in five-GCC countries (Kuwait, Qatar, Saudi Arabia, United Arab Emirates and Bahrain), based on a longitudinal analysis of year-end annual reports, covering eight years period from 2007 to 2014.

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Conducting Business with God: Is God Blessing Islamic Banks with Better Financial Performance than Conventional Banks?

International Finance and Banking ◽

10.5296/ifb.v6i2.16035 ◽

2019 ◽

Vol 6 (2) ◽

pp. 40

Author(s):

Musaed S. Alali

Keyword(s):

Financial Performance ◽

Financial Analysis ◽

Stock Exchange ◽

The Other ◽

Islamic Banks ◽

Return On Assets ◽

Return On Equity ◽

Significant Difference ◽

Kuwait Stock Exchange ◽

Conventional Banks

This study aims to compare the financial performance between Islamic and conventional banks listed at Kuwait stock exchange over the period 2011-2018 using the modified DuPont model of financial analysis which is based on the analysis of return on equity (ROE). Unlike previous studies where researchers compared the performance on a bank-to-bank basis, this study examines the aggregate ratios of Islamic banks and compare it to aggregate ratios of conventional banks. The study also adds volatility into the model since consistency in returns indicated a more stable sector. Results obtained from this study showed that conventional banks in Kuwait had a better mean performance during the study period in terms of both return on assets (ROA) and return in equity (ROE), Islamic banks also showed a higher deviation in these two ratios resulting in a lower Sharpe ratio. While the results showed no statistically significant mean difference between Islamic and conventional banks in terms of return on assets (ROA), the results also showed a statistically significant difference in mean return on equity (ROE) between the two sub-sectors. On the other hand, Islamic banks showed an impressive improvement in their ratios during the last three years of the study period which impose a real threat to conventional banks in the future.

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ANALISIS KINERJA KEUANGAN: SESUDAH DAN SEBELUM KRISIS EKONOMI GLOBAL 2008 PADA PERUSAHAAN MANUFAKTUR DI INDONESIA

Jurnal Akuntansi Auditing dan Keuangan BALANCE ◽

10.25170/balance.v16i1.1285 ◽

2020 ◽

Vol 16 (1) ◽

pp. 19

Author(s):

Miswanto Miswanto ◽

Vajrin Syawaluddin Aslan

Keyword(s):

Financial Performance ◽

Economic Crisis ◽

Descriptive Analysis ◽

T Test ◽

Manufacturing Companies ◽

Return On Assets ◽

Return On Equity ◽

Net Profit ◽

Global Economic Crisis ◽

Better Than

This study aims to analyze the financial performance of Indonesian manufacturing companies after and before the global economic crisis of 2008. In this study, financial performance is measured by Return on Assets (ROA), Return on Equity (ROE) and Net Profit Margin (NPM). By comparing the average ROA, ROE and NPM before after and before the crisis, the results of testing with descriptive analysis can be stated that ROA, ROE and NPM after the crisis are higher than before the crisis. Thus financial performance after crisis has increased compared to before the crisis. Based on descriptive analysis, it can be found that the performance of financial manufacturing companies after the the crisis is better than before crisis. Based on the t test, the results of testing on ROA, ROE and NPM are as follows. First, the ROA after the crisis showed greater than before the 2008 global economic crisis and the increase was said to be significant. Second, the ROE after the crisis showed greater than before the global economic crisis, but was not statistically significant. Third, the NPM after the crisis also showed greater than before the crisis, but it was not statistically significant.Thus, the finding with the t test shows that financial performance as measured by ROA, its performance after the crisis increases compared to before the crisis.

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Analisa Dampak Covid-19 terhadap Kinerja Keuangan Perusahaan Pembiayaan di Indonesia

Jurnal Bisnis, Manajemen, dan Ekonomi ◽

10.47747/jbme.v2i2.217 ◽

2021 ◽

Vol 2 (2) ◽

pp. 22-29

Author(s):

Maria Esomar

Keyword(s):

Financial Performance ◽

Financial Services ◽

Secondary Data ◽

T Test ◽

Return On Assets ◽

Return On Equity ◽

Paired Sample ◽

The Public ◽

Before And After ◽

The Impact

The financing industry in Indonesia faces significant challenges due to the Covid-19 pandemic. The amount of financing channeled to the public and debtors’ ability to pay decreases. The purpose of this study is to analyze the impact of Covid-19 on the financial performance of finance companies by analyzing financial ratios, namely the Financing to Deposit Ratio (FDR), NPF (NonPerforming Financing (NPF) Return on Assets (ROA) and Return on Equity (ROE). This study applies a quantitative approach because the data collected are numbers. The data used are secondary data in the form of finance company statistics published by the Financial Services Authority (OJK), within the period of 9 months before (June 2019 - February 2020) and 9 months after (April 2020 - December 2020) the announcement of the first Covid-19 case in Indonesia on March 2nd, 2020. The test is conducted using th Paired Sample T-Test. The results of the data processing display that there are differences in the financial performance of finance companies in Indonesia before and after the Covid-19 which can be seen from the results of the Table of Paired Sample T-Test for the ratio of FDR, NPF, ROA, and ROE. Keywords : Financial performance, FDR, NPF, ROA, ROE

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Pengaruh Financial Leverage Terhadap Kinerja Keuangan (Studi Pada Perusahaan Properti dan Real Estate yang Terdaftar di Bursa Efek Indonesia Periode 2011-2015)

Jurnal Riset Bisnis dan Investasi ◽

10.35697/jrbi.v3i3.944 ◽

2018 ◽

Vol 3 (3) ◽

pp. 45

Author(s):

Hana Nopitasari ◽

Ermina Tiorida ◽

Ira Siti Sarah

Keyword(s):

Real Estate ◽

Financial Performance ◽

Stock Exchange ◽

Hypothesis Test ◽

Secondary Data ◽

P Value ◽

Debt Ratio ◽

Financial Leverage ◽

Return On Equity ◽

Equity Ratio

The main objective of this study is to determine the effect of financial leverage on financial performance of the 39 selected property and real estate companies listed in Indonesia Stock Exchange over a period of five years (2011-2015). This work employed two financial leverage for the independent variables such as: debt ratio (DR) and debt to equity ratio (DER) in determining their effect on financial performance such as return on equity (ROE), sales growth and price earning ratio (PER) as a dependent variable. The secondary data were obtained from the financial statement (comprehensive income statement and statement of financial position) of the selected companies quoted from the Indonesia Stock Exchange (IDX). Descriptive statistical test, simple linear regression test and hypothesis test are used to analyze the data of this research. The results of the analysis show that there is a positive and insignificant influence between financial leverage on the financial performance of 39 companies, proven by hypothesis testing of t-value (1.610) < t-table (1.65481) and P-value of 0.109, while the value of regression coefficient of financial performance of 0.008 Tujuan utama penelitian ini adalah untuk mengetahui pengaruh financial leverage terhadap kinerja keuangan 39 perusahaan properti dan real estate terpilih yang terdaftar di Bursa Efek Indonesia selama lima tahun (2011-2015). Penelitian ini menggunakan dua leverage keuangan untuk variabel independen seperti debt ratio (DR) dan debt to equity ratio dalam menentukan pengaruhnya terhadap kinerja keuangan seperti return on equity (ROE), pertumbuhan penjualan dan price earning ratio (PER) sebagai variabel dependen. Data sekunder diperoleh dari laporan keuangan (laporan laba rugi komprehensif dan laporan posisi keuangan) dari perusahaan terpilih yang dikutip dari Bursa Efek Indonesia (BEI). Uji statistik deskriptif, uji regresi linier sederhana dan uji hipotesis digunakan untuk menganalisis data penelitian ini. Hasil analisis menunjukkan bahwa terdapat pengaruh positif dan signifikan antara financial leverage terhadap kinerja keuangan dari 39 perusahaan. Hal ini dibuktikan dengan pengujian hipotesis yang menghasilkan nilai t hitung (1.610) < t-table (1.65481) dan P-value sebesar 0.109, dengan nilai koefisien regresi kinerja keuangan sebesar 0,008.

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UAE Banks’ Performance and the Oil Price Shock: Evidence across Conventional and Islamic Banks

Review of Middle East Economics and Finance ◽

10.1515/rmeef-2019-0005 ◽

2019 ◽

Vol 15 (3) ◽

Author(s):

Magda Elsayed Kandil ◽

Minko Markovski

Keyword(s):

Negative Impact ◽

Oil Price ◽

Islamic Banks ◽

Fiscal Consolidation ◽

Return On Assets ◽

Return On Equity ◽

Oil Price Shock ◽

The Difference ◽

Conventional Banks ◽

Conventional And Islamic Banks

Abstract This study attempts to identify whether the oil price fall to a “new normal” in mid-September 2014 has had an impact on banks’ performance in the UAE, such as Return on Assets (ROA) and Return on Equity (ROE) in addition to credit and deposit growth. The sample is for a sample of 22 national banks in the country over a period of 15 quarters. The oil price fall has had a negative impact on all four banking indicators. In addition, the analysis evaluates the difference in ROA, ROE and credit and deposit growth by bank type, conventional vs. Islamic banks, across the sample of 22 banks. The results indicate that Islamic banks have a higher lending and deposit growth rates, however conventional banks tend to have better indicators of performance. Further, the oil price fall has impacted banks’ performance adversely, and the growth of assets and liabilities as a result of the slowdown in economic activity, fiscal consolidation, and decreasing levels of employment and corporate profitability. Further, Islamic banks, judged by lending and deposit growth, have managed to tailor their products to cater to a growing demand. However growth objectives appear to have reduced the margins of return in Islamic banks, compared to conventional banks.

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ANALISIS PENGUKURAN KINERJA KEUANGAN PASCA MERGER DAN AKUISISI PADA PERUSAHAAN YANG TERDAFTAR DI BEI

Jurnal Benefita ◽

10.22216/jbe.v2i3.1435 ◽

2017 ◽

Vol 2 (3) ◽

pp. 230

Author(s):

Edi Edi ◽

Sylvia Rusadi

Keyword(s):

Financial Performance ◽

Merger And Acquisition ◽

Significant Decline ◽

T Test ◽

Return On Assets ◽

Current Ratio ◽

Net Worth ◽

Paired Sample ◽

Purposive Sampling ◽

Equity Ratio

This paper examineaneffect of the financial performance of post-merger and acquisition. The financial performance is measured by using ratios, such as return on net worth, return on assets, current ratio, quick ratio, and debt to equity ratio.The samples are firms which did merger and acquisition activity during the years 2003-2011 and that listed on Indonesia Stock Exchange. Data which used in this research is the annual financial report three years before and three years after the mergers and acquisitions by using purposive sampling method. Analysis of the data used to test the hypothesis using paired sample t-test. The results of this study indicate merger firms are having decline performance, debt to equity ratio show significant decline, and other ratios also got decline, though not significant. On the other side, return on net worth and return on assets has significant decline after acquisition, except for current ratio which have insignificant decline after acquisition. Quick ratio and debt to equity ratio has insignificant improvements after acquisition. Artikel ini meneliti pengaruh kinerja keuangan pasca merger dan akuisisi. Kinerja keuangan diukur dengan menggunakan rasio, seperti return on net worth, return on asssets, current ratio, quick ratio, dan debt to equity ratio.Sampel yang digunakan adalah perusahaan yang melakukan aktivitas merger dan akuisisi selama tahun 2003-2011 dan yang terdaftar di Bursa Efek Indonesia. Data yang digunakan dalam penelitian ini adalah laporan keuangan tahunan 3 tahun sebelum dan 3 tahun sesudah merger dan akuisisi dengan menggunakan metode purposive sampling. Analisis data yang digunakan untuk uji hipotesis menggunakan paired sample t-test.Hasil dari penelitian ini menunjukkan bahwa perusahaan merger mengalami penurunan kinerja, debt to equity ratio menunjukkan penurunan yang signifikan, dan rasio lainnya juga mendapat penurunan, meskipun tidak signifikan. Di sisi lain, return on net worth dan return on assets memiliki penurunan yang signifikan setelah akuisisi, kecuali untuk current ratio yang memiliki penurunan yang tidak signifikan setelah akuisisi. Quick ratio dan debt to equity ratio memiliki peningkatan yang tidak signifikan setelah akuisisi.

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The Determinants of Banking Stability: The Example of Tunisia

International Academic Journal of Accounting and Financial Management ◽

10.9756/iajafm/v8i1/iajafm0801 ◽

2021 ◽

Vol 8 (1) ◽

pp. 01-10

Author(s):

Jamel Eddine Mkadmi ◽

Najwa Baccari ◽

Adel Ncib

Keyword(s):

Gross Domestic Product ◽

Earnings Management ◽

Debt Ratio ◽

Z Score ◽

Return On Assets ◽

Return On Equity ◽

Net Interest Margin ◽

Banking Stability ◽

The Stability ◽

Corporate Social

This paper try to study the factors of the stability of Tunisian banks from a sample made up of 7 Tunisian banks listed during the period 2005-2014. The important determinants used to explain the stability of the banks are: the z-score and the capitalization ratio. The results revealed, firstly, that the profitability variables such as: return on assets (ROA) has a positive and significant impact on the stability of banks and return on equity (ROE) has a negative and significant effect. Besides, bank-specific variables such as: the net interest margin (NIM), the non-interest income (NII), the age and the size of the bank affect positively and not significantly the banking stability. But the debt ratio (END) has a negative and significant impact on banking stability. Finally, gross domestic product (GDP) affects positively and not significantly on banking stability. This paper investigates the connection between earnings management and corporate social.

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Pengaruh Rasio Profitabilitas terhadap Harga Saham di JII (Studi Kasus pada PT. Indofood CBP Sukses Makmur, TBK Periode 2011-2015)

Jurnal Intelektualita Keislaman Sosial dan Sains ◽

10.19109/intelektualita.v6i2.1610 ◽

2017 ◽

Vol 6 (2) ◽

pp. 255-270

Author(s):

Puti Aulia M

Keyword(s):

T Test ◽

Return On Assets ◽

F Test ◽

Return On Equity

Penelitian ini berjudul “Pengaruh Rasio Profitabilitas terhadap Harga Saham di JII (Studi Kasus pada PT. Indofood CBP Sukses Makmur, TBK Periode 2011-2015)”. Tujuan penelitian ini adalah untuk mengetahui pengaruh pengaruh Return On Asset (ROA) dan Return On Equity (ROE) secara parsial terhadap harga saham di JII (studi kasus pada PT. Indofood CBP Sukses Makmur, Tbk Periode 2011-2015) dan untuk mengetahui pengaruhReturn On Asset (ROA) dan Return On Equity (ROE) secara simultan terhadap harga saham di JII (studi kasus pada PT. Indofood CBP Sukses Makmur, Tbk periode 2011-2015). Penelitian ini merupakan penelitian kausal, penelitian kausal merupakan bentuk penelitian yang sifatnya sebab-akibat, artinya keadaan satu variabel disebabkan atau ditentukan oleh keadaan satu atau lebih variabel lain. Penelitian kausal akan menghasilkan data dalam bentuk angka sehingga data dianalisis dengan pendekatan kuantitatif. Hasil penelitian menunjukan bahwa variabel-variabel independen ROA dan ROE secara simultan mempengaruhi variabel dependen yaitu harga saham di Jakarta Islamic Index (JII). Hal ini ditunjukkan bahwa nilai F test (Fhitung) sebesar 17,946 dengan signifikan 0,000 atau Fhitung > Ftabel (17,946 > 3,59). Variabel-variabel independen ROA dan ROE secara parsial masing-masing mempunyai pengaruh sebagai berikut: Return On Assets (ROA) memberikan pengaruh positif terhadapa harga saham dalam Jakarta Islamic Index (JII)yang ditunjukkan dengan nilai t test (thitung) sebesar -5,989 dengan tingkat signifikan sebesar 0,000 (dibawah 0,05) atau thitung < ttabel ( -5,989 < -2,10092) dan Return On Equity (ROE) memberikan pengaruh positif terhadap harga saham dalam Jakarta Islamic Index (JII) yang ditunjukkan oleh nilai t test (thitung) sebesar 5,867 dengan tingkat signifikansi sebesar 0,000 (di bawah 0,05) atau thitung> t tabel (5,867 > 2,10092).

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