Islamic Banks Financial Performance Indicators in Dual Banking System: The Case of Indonesia

  • Junaidi Junaidi Universitas Muhammadiyah Palopo
  • Altri Wahida Universitas Muhammadiyah Palopo
  • Harmita Sari Universitas Muhammadiyah Palopo
  • Suhardi M Anwar Universitas Muhammadiyah Palopo
Keywords: Indonesian Islamic Bank (IIB), Factor Analysis, Financial Ratios, Financial Performance


The aim of this research is to elaborate the financial performance of Indonesia Islamic banks (IIB). Used factor analysis to examine financial ratios ten Indonesia Islamic banks (IIB) over the period 2010-2019. The result of recent study proven six factors are key point to describe that the majority of financial ratios in this study namely liquidity, capital adequacy, profitability, efficiency, coverage and control are the factors according to the rank. The study also proven that stability of factors and loadings are stable over time. This study provides an indicator performance of IIB and may be worthwhile to stakeholders have interested with Islamic banking. This research has proved the IIB performance towards important aspect of dual banking system such as Indonesia.


Download data is not yet available.


Abedifar, P., Molyneux, P. & Tarazi, A. (2013). Risk in Islamic Banking. Review of Finance, 17(6), 2035-2096.

Alam, N. & Rizvi, S. A. R. (2017). Empirical research in Islamic banking: Past, Present, and Future. In Alam, N. & Rizvi, S. A. R. (Ed.), Islamic Banking: Growth, Stability and Inclusion, Springer, Cham, CH, 1-13.

Al-Kayed, L. T., Zain, S. R. S. M. & Duasa, J. (2014). The relationship between capital structure and performance of Islamic banks. Journal of Islamic Accounting and Business Research, 5(2), 158-181.

Alqahtani, F. & Mayes, D. G. (2018). Financial stability of Islamic banking and the global financial crisis: Evidence from the Gulf Cooperation Council. Economics Systems, 42(2), 346-360.

Asmild, M., Kronborg, D., Mahbub, T. & Matthews, K. (2019). The Ef?ciency Patterns of Islamic Banks during the Global Financial Crisis: The Case of Bangladesh. The Quarterly Review of Economics and Finance, 74 (November), 67-74.

Bashir, A. (2003). Determinants of profitability in Islamic banks: Some evidence from the Middle East. Islamic Economic Studies, 11(1), 31-57.

Beck, T., Demirgüç-Kunt, A. & Merrouche, O. (2013). Islamic vs. conventional banking: Business model, efficiency, and stability. Journal of Banking & Finance, 37(2), 433-447.

Belanès, A., Ftiti, Z. & Regaïeg, R. (2015). What can we learn about Islamic Banks e?ciency under the subprime crisis? Evidence from GCC Region. Paci?c-Basin Finance Journal, 33(June), 81-92.

Ben Khediri, K., Ben Ali, S. & Ben Khedhiri, H. (2010). Bank-specific, industry-specific and macroeconomic determinants of African Islamic banks profitability. International Journal of Business and Management Science, 3(1), 39-56.

Ben Khediri, K., Charfeddine, L. & Youssef, S. B. (2015). Islamic versus conventional banks in the GCC countries: A comparative study using classi?cation techniques. Research in International Business and Finance, 33(January), 75-98.

Bitar, M., Madiès, P. & Taramasco, O. (2017). What makes Islamic banks different? A multivariate approach. Economics Systems, 41(2), 215-235.

Chen, N., Liang, H. Y. & Yu, M. T. (2018). Asset diversi?cation and bank performance: Evidence from three Asian countries with a dual banking system. Pacific-Basin Finance Journal, 52(December), 40-53.

Chong, B. S. & Liu, M. H. (2009). Islamic banking: Interest free or interest based? Pacific Basin Finance Journal, 17(1), 125-144.

Chowdhury, M. A. F. & Rasid, M. E. S. M. (2015). The determinant of the profitability of Islamic banks: a cross-sectional study from Asia and Africa. International Journal of Business and Globalisation, 15(3), 375-388.

Chu, D. K., Zollinger, T. W., Kelley, A. S. & Saywell, R. M. (1991). An empirical analysis of cash ?ow, working capital and the stability of ?nancial ratio groups in the hospital industry. Journal of Accounting and Public Policy, 10(1), 39-58.

Eljelly, A. M. A. (2002). Characterizing Saudi commercial banks performance: an exploratory factor analytic approach. Middle East Business and Economic Review, 14(1), 43-54.

Eljelly, A. M. A. & Elobeed, A. A. (2013). Performance indicators of banks in a total Islamic banking system: the case of Sudan. International Journal of Islamic and Middle Eastern Finance and Management, 6(2), 142-155.

Field, A. (2018), Discovering statistics using IBM Statistics using, London, GBR.

Grassa, R. (2016). Ownership structure, deposit’s structure, income structure and insolvency risk in GCC Islamic banks. Journal of Islamic Accounting and Business Research, 7(2), 93-111.

Haron, S. (1996). The effects of management policy on the performance of Islamic banks. Asia Pacific Journal of Management, 13(2), 63-76.

Hassan, M. K. & Bashir, A. M. (2003). Determinants of Islamic banking profitability", paper presented at the ERF 10th Annual Conference, 16-18 December, Marrakesh, Morocco, available at: (accessed on 20 November 2020).

Ibrahim, M. H. & Rizvi, A. R. (2017). Do we need bigger Islamic banks? An assessment of bank stability. Journal of Multinational Financial Management, 40(June), 77-91.

Ismal, R. (2010). Assessment of liquidity management in Islamic banking industry. International Journal of Islamic and Middle Eastern Finance and Management, 3(2), 147-167.

Iqbal, Z. & Mirakhor, A. (2011). An introduction to Islamic finance: Theory and Practice, John Wiley & Sons, Pvt. Ltd, Singapore, SG.

Johnes, J., Izzeldin, M. & Pappas, V. (2014). A comparison of performance of Islamic and conventional banks 2004-2009. Journal of Economic Behavior & Organization, 103(July), S93-S107.

Masood, O. & Ashraf, M. (2012). Bank-specific and macroeconomic profitability determinants of Islamic banks: The case of different countries. Qualitative Research in Financial Markets, 4(2-3), 255-268.

Mirakhor, A. (2008). Lesson of the recent crisis for Islamic finance. IIUM Journal of Economics and Management, 16(2), 132-138.

Mokni, R. & Rachdi, H. (2014). Assessing the bank profitability in the MENA region: A comparative analysis between conventional and Islamic bank. International Journal of Islamic and Middle Eastern Finance and Management, 7(3), 305-332.

Nawaz, T. & Haniffa, R. (2017). Determinants of financial performance of Islamic banks: An intellectual capital perspective. Journal of Islamic Accounting and Business Research, 8(2), 130-142.

Olson, D. & Zoubi, T. A. (2008). Using Accounting Ratios to distinguish between Islamic and conventional banks in the GCC region. The International Journal of Accounting, 43(1), 45-65.

Pinches, G. E., Mingo, K. A. & Caruthers, J. K. (1973). The stability of ?nancial patterns in industrial organizations. Journal of Finance, 28(2), 389-396.

Safiullah, M. & Shamsuddin, A. (2018). Risk in Islamic banking and corporate governance. Pacific-Basin Finance Journal, 47(2), 129-149.

Sakti, M. R. P. & Mohamad, A. (2018). Efficiency, stability and asset quality of Islamic vis-à-vis conventional banks: Evidence from Indonesia. Journal of Islamic Accounting and Business Research, 9(3), 378-400.

Shaikh, S. A., Ismail, M. A., Shafiat, M. H. M., Ismail, G. & Shahimi, S. (2017). Role of Islamic Banking in Financial Inclusion: Prospects and Performance. In Alam, N. and Rizvi, S.A.R. (Ed.), Islamic Banking: Growth, Stability and Inclusion, Springer, Cham, CH, 33-49.

Smaoui, H. & Salah, I. (2012). Profitability of Islamic banks in the GCC region. Global Economy and Finance Journal, 5(1), 85-102.

Trabelsi, M. A. & Trad, N. (2017). Profitability and risk in interest-free banking industries: a dynamic panel data analysis. International Journal of Islamic and Middle Eastern Finance and Management, 10(4), 454-469.

Trad, N., Trabelsi, M. A. & Goux, J. F. (2016). Risk and pro?tability of Islamic banks: A religious deception or an alternative solution? European Research on Management and Business Economics, 9(1), 46-66.

Wanke, P., Azad, M. A. K., Barros, C. P. & Hassan, M. L. (2016). Predicting Efficiency in Islamic Banks: An Integrated Multi criteria Decision Making (MCDM) Approach. Journal of International Financial Markets, Institutions & Money, 45(November), 126-141.

Zarrouk, H., Jedidia, K. B. & Moualhi, D. M. (2016). Is Islamic bank profitability driven by same forces as conventional banks? International Journal of Islamic and Middle Eastern Finance and Management, 9(1), 46-66.

How to Cite
Junaidi, J., Wahida, A., Sari, H., & Anwar, S. (2021). Islamic Banks Financial Performance Indicators in Dual Banking System: The Case of Indonesia. Fokus Bisnis : Media Pengkajian Manajemen Dan Akuntansi, 20(2), 182-193.