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Abstract

Purpose – This study explores comparatively the effects of capital adequacy, non-performing loans/financing, liquidity, and operating expenses on Indonesia’s conventional and Islamic banking performances between the pre-and post-2008 Global Financial Crisis (GFC) periods.

Methodology – The study selected the three respective largest conventional and Islamic banks as a sample of the study using a purposive sampling technique. The data for the pre-2008 GFC period (i.e., 2003 – 2008) and the post-2008 GFC period (i.e., 2009 – 2017) were analyzed using a panel multiple regression analysis.

Findings – The study documented different influences of capital adequacy, liquidity, non-performing loans/financing, and operating expenses on conventional and Islamic banking performances between the pre- and post-2008 GFC. 

Research limitations – This study only investigated the banks’ characteristics as the determinants of banking performances and compared merely the effects the pre- and post-2008 GFC periods.

Practical implications – To maintain and enhance their performances, the Islamic and conventional banks should adopt different financial policies between the normal and turbulent economic periods. The Islamic banks were in a better position amid the crisis, showing an urgent need for the government to further promote Islamic banks, as they could offer better solutions for economic stability.

Originality – The study examined a larger number of conventional and Islamic banks over more extended and updated study periods, namely six years (i.e., 2003-2008) before the 2008 GFC and ten years (i.e., 2009-2018) after the 2018 GFC. The study is among the first attempts to comparatively analyze the determinants of Indonesia’s Islamic and conventional banking performances between the pre- and post-2008 GFC periods using the panel multiple regression analysis to arrive at more comprehensive and robust empirical evidence.

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Author Biographies

M. Shabri Abd. Majid, Department of Islamic Economics, Faculty of Economics and Business, Universitas Syiah Kuala, Banda Aceh, Indonesia

Dr. M. Shabri Abd. Majid, M.Ec is a senior lecturer at the Faculty of Economics, Syiah Kuala University. He received his Sarjana Ekonomi (SE) from Syiah Kuala University, Indonesia, in 1995. He completed his Master of Economics (MEc) and PhD in Financial Economics from the International Islamic University Malaysia (IIUM) in 1998 and 2005, respectively. He has served Kulliyyah of Economics and Management Sciences (KENMS) IIUM as the Associate Professor for six years (2005-2011). He has been appointed as the Head of the Islamic Economics Department, Faculty of Economics, Syiah Kuala University, Indonesia from 2014 to 2017. He also has served the Institute for Research and Community Services, Syiah Kuala University from 2016 to 2018. His research interests include financial economics, applied econometrics, Islamic economics, banking and finance. He has published 49 referred articles indexed in the Scopus database, such as International Journal of Emerging Markets, Global Economic Review, Journal of Asia-Pacific Business, Studies in Economics and Finance, International Journal of Managerial Finance, Journal of Economic Cooperation and Development, Review of Islamic Economics, and JKAU: Islamic Economics. He has also presented his papers in various seminars locally and internationally. He is the Editor-in-Chief, Aceh International Journal of Social Sciences. He has serving several international journals as the editorial boards such as Gadjahmada International Journal of Business, etc.

Sri Ulina, Department of Islamic Economics, Faculty of Economics and Business, Universitas Syiah Kuala, Banda Aceh, Indonesia

A graduate student in Islamic Economics, Faculty of Economics and Business, Universitas Syiah Kuala, Banda Aceh, Indonesia.
How to Cite
Majid, M. S. A., & Ulina, S. (2020). Does the 2008-global financial crisis matter for the determinants of conventional and Islamic banking performances in Indonesia?. Jurnal Ekonomi & Keuangan Islam, 6(2), 77–90. https://doi.org/10.20885/jeki.vol6.iss2.art1
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