Islamic bank margins in Indonesia: The role of market power and bank-specific variables
AbstractOur study examines the determinants of bank margins in Indonesian Islamic banks. The determinants of bank margins consist of market-and-bank-specific variables. We investigate 31 banks, using quarterly data from 2015: Q1 to 2020: Q4. Panel regression with unbalanced data is employed. The fin...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2023-12-01
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| Series: | Cogent Business & Management |
| Subjects: | |
| Online Access: | https://www.tandfonline.com/doi/10.1080/23311975.2023.2202028 |
| _version_ | 1797265284093968384 |
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| author | Agus Widarjono Priyonggo Suseno Devi Utami Rika Safitri Atif Yaseen Kurniawan Azra Irma Nur Hidayah |
| author_facet | Agus Widarjono Priyonggo Suseno Devi Utami Rika Safitri Atif Yaseen Kurniawan Azra Irma Nur Hidayah |
| author_sort | Agus Widarjono |
| collection | DOAJ |
| description | AbstractOur study examines the determinants of bank margins in Indonesian Islamic banks. The determinants of bank margins consist of market-and-bank-specific variables. We investigate 31 banks, using quarterly data from 2015: Q1 to 2020: Q4. Panel regression with unbalanced data is employed. The findings indicate that higher Islamic bank margins are positively linked to banks with higher market power. Bank with high risk-sharing financing has low bank margins. Bank-specific variables such as income diversification, risk-averse, financing, and financing risk influence bank margins. This study also documents that the effect of market power on Islamic bank margins is more pronounced in Islamic bank subsidiaries, and lower bank margins through risk-sharing financing are more prominent in Islamic bank subsidiaries. These results suggest important policy implications that Islamic banks should focus on risk-sharing financing as a core business of Islamic banks because it can reduce the price of Islamic bank financing products as well as their intermediation costs. |
| first_indexed | 2024-03-07T14:19:49Z |
| format | Article |
| id | doaj.art-db8795e37a934ccd822b22593cdcf273 |
| institution | Directory Open Access Journal |
| issn | 2331-1975 |
| language | English |
| last_indexed | 2024-04-25T00:42:21Z |
| publishDate | 2023-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Business & Management |
| spelling | doaj.art-db8795e37a934ccd822b22593cdcf2732024-03-12T08:30:27ZengTaylor & Francis GroupCogent Business & Management2331-19752023-12-0110210.1080/23311975.2023.2202028Islamic bank margins in Indonesia: The role of market power and bank-specific variablesAgus Widarjono0Priyonggo Suseno1Devi Utami Rika Safitri2Atif Yaseen3Kurniawan Azra4Irma Nur Hidayah5Department of Economics,Faculty of Business and Economics, Universitas Islam Indonesia,IndonesiaDepartment of Economics,Faculty of Business and Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia,IndonesiaDepartment of Economics,Faculty of Business and Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia,IndonesiaDepartment of Economics,Faculty of Business and Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia,IndonesiaDepartment of Economics,Faculty of Business and Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia,IndonesiaDepartment of Economics,Faculty of Business and Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia,IndonesiaAbstractOur study examines the determinants of bank margins in Indonesian Islamic banks. The determinants of bank margins consist of market-and-bank-specific variables. We investigate 31 banks, using quarterly data from 2015: Q1 to 2020: Q4. Panel regression with unbalanced data is employed. The findings indicate that higher Islamic bank margins are positively linked to banks with higher market power. Bank with high risk-sharing financing has low bank margins. Bank-specific variables such as income diversification, risk-averse, financing, and financing risk influence bank margins. This study also documents that the effect of market power on Islamic bank margins is more pronounced in Islamic bank subsidiaries, and lower bank margins through risk-sharing financing are more prominent in Islamic bank subsidiaries. These results suggest important policy implications that Islamic banks should focus on risk-sharing financing as a core business of Islamic banks because it can reduce the price of Islamic bank financing products as well as their intermediation costs.https://www.tandfonline.com/doi/10.1080/23311975.2023.2202028Market powerrisk-sharing financingIslamic bank marginsIndonesiaG21G32 |
| spellingShingle | Agus Widarjono Priyonggo Suseno Devi Utami Rika Safitri Atif Yaseen Kurniawan Azra Irma Nur Hidayah Islamic bank margins in Indonesia: The role of market power and bank-specific variables Cogent Business & Management Market power risk-sharing financing Islamic bank margins Indonesia G21 G32 |
| title | Islamic bank margins in Indonesia: The role of market power and bank-specific variables |
| title_full | Islamic bank margins in Indonesia: The role of market power and bank-specific variables |
| title_fullStr | Islamic bank margins in Indonesia: The role of market power and bank-specific variables |
| title_full_unstemmed | Islamic bank margins in Indonesia: The role of market power and bank-specific variables |
| title_short | Islamic bank margins in Indonesia: The role of market power and bank-specific variables |
| title_sort | islamic bank margins in indonesia the role of market power and bank specific variables |
| topic | Market power risk-sharing financing Islamic bank margins Indonesia G21 G32 |
| url | https://www.tandfonline.com/doi/10.1080/23311975.2023.2202028 |
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