The Islamic Banking, Asset Quality: “Does Financing Segmentation Matters” (Indonesia Evidence)

2018 ◽  
Vol 9 (5) ◽  
pp. 221-235 ◽  
Author(s):  
Lucky Nugroho ◽  
Nurul Hidayah ◽  
Ahmad Badawi
Keyword(s):  
Financial Stability ◽  
Quantitative Method ◽  
Statistical Data ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Statistical Tool ◽  
Segmentation Strategy ◽  
Regression Test ◽  
Asset Quality

Abstract Bank stability becomes one of the crucial pillars in maintaining economic growth. Therefore, the segmentation strategy is needed because it aims to improve the financial stability of the bank (decrease Non-Performing Loan-NPL / Non-Performing Financing-NPF). This study aims to determine the effect of segmentation on the quality of Islamic banks proxied with NPF. The method used is a quantitative method with multiple regression test and statistical tool Stata version 13. From the results of statistical data, it is known that the retail segment has a more significant influence than the wholesale segment, which is 92.61% and 56.05%. Therefore, sharia banks should have their business priorities in the retail segment, especially business in the microfinance segment by maintaining the quality of financing through selective financing channeling.

scholarly journals DOES CORPORATE GOVERNANCE MATTER FOR ASSET QUALITY OF ISLAMIC BANKS?

2021 ◽  
Vol 24 (2) ◽  
pp. 221-236
Author(s):  
Ejaz Aslam ◽  
Aziz Ur-Rehman ◽  
Anam Iqbal
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Banking Sector ◽  
Policy Implications ◽  
Islamic Banking ◽  
Board Independence ◽  
Islamic Banks ◽  
Asset Quality ◽  
The Impact

This study investigates the impact of corporate governance on asset quality of Islamic banks by employing data on 129 Islamic banks from 29 countries spanning the period from 2008 to 2017. The study shows that asset quality of Islamic banks is positively and significantly sensitive to an increase in board independence, Shariah board, and audit committee effectiveness. The study finds that female participation in management as CEOs seems to detract from good performance and that more board meetings can be harnessed to improve banks’ asset quality. These empirical findings have practical policy implications regarding asset quality management and board construction within the Islamic banking sector.

scholarly journals Pengaruh Kualitas Aset Terhadap Profitabilitas Pada Perbankan Syariah Di Indonesia

2017 ◽  
Vol 2 (1) ◽  
pp. 53
Author(s):  
Sineba Arli Silvia
Keyword(s):  
Linear Regression Analysis ◽  
Secondary Data ◽  
Multiple Linear Regression Analysis ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Significance Level ◽  
Asset Quality ◽  
Productive Assets

The healthy bank is very important because they manage public’s funds that entrusted to them by measuring the asset quality of the bank. Asset quality is a very important component, due to poor asset quality has proven to be the cause of failure of the bank, despite the obvious cause not only liquidity or stock. This research aimed to analyze the effect of asset quality toward the profitability of Islamic Banking in Indonesia. This research examines the effect of the variable of quality of productive assets (KAP) and Non-Performing Financing (NPF) toward the Return on Assets (ROA). The population of this research is the general Islamic Banks (BUS ) from 2010 to 2015. This research uses purposive sampling to determining the sample. The sample used in this research is the general Islamic banks that publish annual reports on the period 2010-2015. With certain criteria, there is 8 BUS sample. The data research is secondary data obtained from the website of each bank. While the method of data analysis uses multiple linear regression analysis. The results of this research showed that the variables of KAP and NPF had the effect toward ROA amounted 18.1 percent, with the significance level of 0.050. KAP variable partially had positive and significant impact toward ROA of Islamic Banking in Indonesia (0.034

scholarly journals Standard Quality Banking Services of Islamic Banks

2018 ◽  
Vol 8 (1) ◽  
pp. 301
Author(s):  
Haneen A. Al-Khawaja ◽  
Barjoyai Bardai
Keyword(s):  
Islamic Law ◽  
Theoretical Aspect ◽  
Islamic Banking ◽  
Islamic Banks ◽  
High Confidence ◽  
Banking Services ◽  
Standard Quality ◽  
Definition Of

This research discusses in detail the theoretical aspect of the quality standards of banking services of traditional Islamic banks. The criterion of "Shari'ah Compliance" was added by the researcher to the importance and role of dealing with Islamic banks, the definition of this standard and its importance, how to test it for banks as well as how, without the legitimate commitment of these banks to what is classified as Islamic from the foundation, we focus on the importance of the existence of a legal commitment to any Islamic bank to achieve the quality of Islamic banking services of high quality in accordance with Islamic law and laws to achieve a high confidence in the customers who belong to him and deal with his Conspiracy.

Identifying the gaps between customer expectations and perceptions on service quality dimensions of Islamic banks in Malaysia

2015 ◽  
Vol 7 (4) ◽  
pp. 424-441 ◽  
Author(s):  
Rafikul Islam ◽  
Selim Ahmed ◽  
Dzuljastri Abdul Razak
Keyword(s):  
Service Quality ◽  
Age Groups ◽  
Educational Background ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Customer Expectations ◽  
Banking Service ◽  
Significant Difference

Purpose – This paper aims to identify the gaps and differences between customer expectations and perceptions on service quality of Islamic banks in Malaysia based on six dimensions of service quality, namely, reliability, responsiveness, assurance, empathy, tangibles and Islamic Shari’ah compliance. Design/methodology/approach – This study surveyed 179 customers who have first-hand experience with Islamic banking services in Malaysia. The research data were analysed using reliability analysis, independent samples t-test and one-way analysis of variance. Findings – The results indicated that customers’ perceptions failed to meet their expectations on the service quality of Islamic banks in Malaysia. The results also indicated that those customers (respondents) aged below 30 years have higher expectations on empathy from the Islamic banking service compared to other age groups. However, there is no significant difference between customer expectations and perceptions of Islamic banking service quality based on educational background and occupation. Research limitations/implications – This research focused solely on Islamic banks in Malaysia and thus the results might not be applicable for other conventional banks. Originality/value – The findings are expected to provide guidelines for enhancing the satisfaction level of clients of the Islamic banking system in Malaysia and other countries.

scholarly journals EVALUATION OF DUAL BANKING SYSTEM IN BANKING IN INDONESIA

2020 ◽  
Vol 11 (2) ◽  
Author(s):  
Amanatun Nisfah Nurun Nikmah ◽  
Tulus Suryanto ◽  
Surono Surono
Keyword(s):  
Financial Stability ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Common Goal ◽  
The Face ◽  
Capital Access ◽  
Conventional Banks ◽  
Banking Institution ◽  
Negative Factors

Evaluation of Dual Banking System in Indonesia. Dual Banking System is the application of two banking systems in one banking institution, namely conventional banking and Islamic banking. Indonesia can optimize the dual banking system through strength share and weakness cover, namely Islamic banks are generally superior in terms of a more stable system in the face of market changes but have deficiencies in infrastructure, whereas conventional banks have large market and capital access and more infrastructure complete, but very vulnerable to crises due to the negative factors of economic integration which are already very strong. The superiority of the dual banking system concept is seen in two separate systems that operationally do not affect each other, but have one common goal, namely financial stability that supports economic growth. So, to achieve this goal the two systems can work together in external factors such as access to capital, infrastructure, supervision or clearing systems that can help interbank liquidity.

Performance comparison of Islamic and conventional banks: empirical evidence from Pakistan

2017 ◽  
Vol 10 (3) ◽  
pp. 419-433 ◽  
Author(s):  
Imran Khan ◽  
Mehreen Khan ◽  
Muhammad Tahir
Keyword(s):  
Management Practices ◽  
Operational Efficiency ◽  
Financial Ratios ◽  
Original Research ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Performance Differences ◽  
Conventional Banks ◽  
Asset Quality

Purpose This study aims to investigate the performance differences of Islamic and conventional banks in Pakistan by using financial ratios. Design/methodology/approach This study analyzed 5 Islamic and 19 conventional banks for the periods of 2007-2014. Two types of analyses were performed – sample t-test and logistic regression. Analysis was also performed on sub-sample considering crisis effects. Findings It was found that Islamic banks are relatively better in profitability, efficiency, risk and liquidity management, while conventional banks are superior in asset quality. Higher efficiency of Islamic banks contradicts with previous studies conducted in Pakistan. Probable reasons for this include phenomenal expansion of Islamic banking industry and its broad appeal to customers in Pakistan. Risk management practices of Islamic banks are superior to conventional banks, as Shariah rules restrict pure speculation in monetary terms. Better asset quality of conventional banks is attributed to their recognition and product diversity. During the crisis, Islamic banks were found less profitable than their counterparts. Research limitations/implications This study suggests that high operational efficiency of Islamic banks should be converted into technical efficiency by improving human resource, introducing innovative market-oriented products and prudent resource allocations. As operational efficiency does not promise returns in long term, to sustain ongoing phenomenal growth of Islamic banking, management needs to gain customer trust. Originality/value This is an original research that compares performance differences across Islamic and conventional banks by using financial ratios.

scholarly journals BANK RUN AND STABILITY OF ISLAMIC BANKING IN INDONESIA

2017 ◽  
Vol 3 (1) ◽  
pp. 25-60 ◽  
Author(s):  
Rahmatina A. Kasri ◽  
Tika Arundina ◽  
Kenny D. Indraswari ◽  
M. Budi Prasetyo
Keyword(s):  
Factor Analysis ◽  
Financial Stability ◽  
Banking System ◽  
Bank Runs ◽  
Primary Data ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Bank Run ◽  
Banking Stability ◽  
Conventional Banks

Bank run is an important economic phenomenon which increasingly occurred in in modern banking system and potentially threatened banking stability as it could trigger a banking crisis. However, most studies related to bank run focus on the occurrence of bank run in conventional banking system. Very few of them discuss the bank run phenomenon under Islamic banking system or dual banking system where Islamic banks jointly operating with conventional banks. Therefore, this study attempts to analyze the determinants of bank run in the Indonesian Islamic banking industry by employing primary data from 256 customers of Indonesia Islamic banks in 2015 and by utilizing factor analysis and descriptive statistics. In theory, Islamic banks tend to be more resilient towards any macroeconomic or financial shocks as compared to conventional banks due to the nature of its asset-based and risk-sharing arrangement. However, the result exhibits that both psychological and fundamental factors (i.e. macroeconomics and bank fundamentals) strongly influence the behaviors of Islamic banking depositors to withdraw their funds, which might trigger the occurrence of bank runs in the country. Insider information, macroeconomic condition and bank fundamental factors are also shown to have the highest impacts among all variables. Hence, in the context of banking stability, the finding implies that Islamic banks are not completely immune to the impacts of macroeconomic shocks or financial crisis. As a country with a dual banking system, Indonesia had experienced several bank runs since 1990s. Therefore, the findings of the study should provide the policy makers important insight into research based-policy in order to attain financial stability as one of the main economic goals of the country.Keywords: Bank run, Islamic bank, Factor analysis, IndonesiaJEL Classification: C83, G21, G28

scholarly journals The Role of Customer Engagement in Islamic Banking

2019 ◽  
Vol 2 (2) ◽  
pp. 123
Author(s):  
Maziyah Mazza Basya
Keyword(s):  
Business Ethic ◽  
Relationship Marketing ◽  
Point Of View ◽  
Customer Engagement ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Islamic Bank ◽  
Islamic Business Ethics

The marketing strategy to be engaged with customer of an Islamic bank must be concerned with its ability to gain a competitive advantage and establish a strong competitive position without neglecting an Islamic business ethic. Customer engagement (CE) in Islamic bank does not take any matter of competing on product and prices, but rather in stressing quality of the services they provide appealing customers conscience. This research attempts to enhance understanding of CE related in its role to increase the quantity and loyalty of Islamic banks customers with the Islamic business ethics point of view. This is a qualitative research that develops customer engagement concept that relevant to be applied in Islamic banking by collecting some of CE theories regarding the CE approach through relationship marketing and analyze them with Islamic business ethic overview. CE in Islamic banking has to be relied with Sharia’s law. The main point of CE in Islamic banking is not only to have a good relationship with the customer and be a brotherhood, but also to reach the Islamic banking purposes.

scholarly journals Islamic Banking Selection Criteria: Case in Indonesia Using Analytic Network Process

2019 ◽  
Vol 10 (1) ◽  
pp. 165
Author(s):  
Aam Slamet Rusydiana ◽  
Fatin Fadhilah Hasib
Keyword(s):  
Analytic Network Process ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Analytical Network Process ◽  
Network Process ◽  
Conventional Banks ◽  
Bank Marketing ◽  
And Behavior ◽  
Selection Of

<p>The Islamic banking industry is currently one of the main indicators of the development of Islamic economics in Indonesia. In Islamic banking issue, one of the important issues is related to people's preferences and behavior towards Islamic banks. The study of the criteria for selecting a bank has been the concern of many bank marketing researchers. Compared to conventional, such studies are relatively minimal, especially in Indonesia. This study tries to analyze the preferences and behavior of criteria for selection of Islamic banks in Indonesia through the Analytical Network Process (ANP) approach.The results conclude that the most priority criteria that influence the selection of Islamic banks in Indonesia are service factors and religiosity factors or the suitability of banks with sharia principles. Therefore, Islamic banks need to constantly improve the quality of services both services and products so that they can compete with conventional banks.</p><p>Industri perbankan syariah saat ini merupakan salah satu indikator utama perkembangan ekonomi Islam di Indonesia. Dalam masalah perbankan syariah, salah satu masalah penting adalah terkait dengan preferensi dan perilaku pemilihan masyarakat terhadap bank syariah. Studi tentang kriteria pemilihan bank syariah telah menjadi perhatian banyak peneliti. Studi tersebut relatif minimal jika dibandingkan dengan bank konvensional, terutama di Indonesia. Penelitian ini mencoba menganalisis preferensi dan perilaku pemilihan kriteria bank syariah di Indonesia melalui pendekatan Analytical Network Process (ANP). Hasilnya menyimpulkan bahwa kriteria yang paling prioritas yang mempengaruhi nasabah dalam memilih bank syariah di Indonesia adalah faktor layanan dan faktor religiusitas atau kesesuaian bank dengan prinsip syariah. Oleh karena itu, bank syariah perlu terus meningkatkan kualitas layanan baik produk maupun jasa sehingga mereka dapat bersaing dengan bank konvensional.</p>

scholarly journals The Competitiveness Creation Strategy of Islamic Banking

2017 ◽  
Vol 5 (2) ◽  
pp. 29-34
Author(s):  
Laila Refiana Said ◽  
Siti Aliyati Albushairi ◽  
Gusti Rina Fariany
Keyword(s):  
Consumer Satisfaction ◽  
Word Of Mouth ◽  
Islamic Law ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Islamic Bank ◽  
New Strategy ◽  
Variable Compliance ◽  
Word Of Mouth Communication

Objective - The development of Islamic banks in Indonesia requires a new strategy. The size of the population of Indonesia is a potential market for Islamic banks to target religious and non-religious customers and implement quality innovation to create value-based services to support the competitiveness of regional economies. This may improve the standard and quality of living. Specifically, this study investigated the influence of Islamic banking service quality dimensions to consumer satisfaction, word-of-mouth communication and loyalty. Methodology/Technique - This study was conducted in Banjarmasin, South Kalimantan, which is an Indonesian province that has a fairly a rapid rate of development of Islamic banking. The study focused on 191 people. Data collection was done by observation and interviews using questionnaires. Findings - Using Partial Least Squares, the resultsdemonstrates the effects of variable compliance, empathy, and value proposition quality on overall satisfaction. This showed that overall satisfaction influences word-of-mouth communication and loyalty. This indicates that both the religious market consumers and the floating market consumers desire the establishment of a strong emotional bond between the Islamic bank, customers and shareholders that are developed together in the face of business risks and share profits fairly and honestly, in accordance with the principles of Islamic law. Furthermore, they want employees to be more empathetic and respond individually to customers. Novelty - The study suggest that a strategy be created in relation to competitiveness in Islamic banking in Banjarmasin to improve the quality of service-based value, and to increase the cultivation of religious customers as well as penetrating the floating market segment. Type of Paper - Empirical Keywords: Carter-Item; Floating-Based Market; Islamic Bank; Religious-Based Market; Servqual.

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