Stability of Islamic versus conventional banks: a Malaysian case
The purpose of this paper is to raise certain questions within the Malaysian banking sector and find the appropriate answers. The research questions of this paper are: a) whether Islamic banks are more stable relative to conventional banks; and b) what are the determinants of stability for both ty...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Penerbit Universiti Kebangsaan Malaysia
2016
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| Online Access: | http://journalarticle.ukm.my/10773/ http://journalarticle.ukm.my/10773/1/jeko_50%281%29-9.pdf |
| _version_ | 1848812503943872512 |
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| author | Muhamad Azhari Wahid, Humayon Dar, |
| author_facet | Muhamad Azhari Wahid, Humayon Dar, |
| author_sort | Muhamad Azhari Wahid, |
| building | UKM Institutional Repository |
| collection | Online Access |
| description | The purpose of this paper is to raise certain questions within the Malaysian banking sector and find the appropriate
answers. The research questions of this paper are: a) whether Islamic banks are more stable relative to conventional
banks; and b) what are the determinants of stability for both types of banks? In measuring and comparing the stability
of Islamic and conventional banks, this study employs the financial soundness indicators (FSI) of the International
Monetary Funds (IMF) and the z-score index. These are then followed by a series of parametric and non-parametric tests.
Thereafter, a pooled ordinary least squares (OLS) robust regression is applied to examine the determinants of stability
for Islamic and conventional banks. The results reveal that Islamic banks are significantly less stable than conventional
banks. However, when the analysis is conducted based on a sample of small and large banks, the results suggest that
only large Islamic banks are less stable than large conventional banks. In contrast, small Islamic banks are found to
be more stable than small conventional banks. Furthermore, the results reveal that bank size, the level of capitalisation
and income diversification are important determinants for the stability of Malaysian Islamic and conventional banks. |
| first_indexed | 2025-11-15T00:03:20Z |
| format | Article |
| id | oai:generic.eprints.org:10773 |
| institution | Universiti Kebangasaan Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T00:03:20Z |
| publishDate | 2016 |
| publisher | Penerbit Universiti Kebangsaan Malaysia |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | oai:generic.eprints.org:107732017-10-10T08:27:15Z http://journalarticle.ukm.my/10773/ Stability of Islamic versus conventional banks: a Malaysian case Muhamad Azhari Wahid, Humayon Dar, The purpose of this paper is to raise certain questions within the Malaysian banking sector and find the appropriate answers. The research questions of this paper are: a) whether Islamic banks are more stable relative to conventional banks; and b) what are the determinants of stability for both types of banks? In measuring and comparing the stability of Islamic and conventional banks, this study employs the financial soundness indicators (FSI) of the International Monetary Funds (IMF) and the z-score index. These are then followed by a series of parametric and non-parametric tests. Thereafter, a pooled ordinary least squares (OLS) robust regression is applied to examine the determinants of stability for Islamic and conventional banks. The results reveal that Islamic banks are significantly less stable than conventional banks. However, when the analysis is conducted based on a sample of small and large banks, the results suggest that only large Islamic banks are less stable than large conventional banks. In contrast, small Islamic banks are found to be more stable than small conventional banks. Furthermore, the results reveal that bank size, the level of capitalisation and income diversification are important determinants for the stability of Malaysian Islamic and conventional banks. Penerbit Universiti Kebangsaan Malaysia 2016 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/10773/1/jeko_50%281%29-9.pdf Muhamad Azhari Wahid, and Humayon Dar, (2016) Stability of Islamic versus conventional banks: a Malaysian case. Jurnal Ekonomi Malaysia, 50 (1). pp. 111-131. ISSN 0127-1962 http://www.ukm.my/fep/jem/content/2016.html |
| spellingShingle | Muhamad Azhari Wahid, Humayon Dar, Stability of Islamic versus conventional banks: a Malaysian case |
| title | Stability of Islamic versus conventional banks: a Malaysian case |
| title_full | Stability of Islamic versus conventional banks: a Malaysian case |
| title_fullStr | Stability of Islamic versus conventional banks: a Malaysian case |
| title_full_unstemmed | Stability of Islamic versus conventional banks: a Malaysian case |
| title_short | Stability of Islamic versus conventional banks: a Malaysian case |
| title_sort | stability of islamic versus conventional banks: a malaysian case |
| url | http://journalarticle.ukm.my/10773/ http://journalarticle.ukm.my/10773/ http://journalarticle.ukm.my/10773/1/jeko_50%281%29-9.pdf |