COMPARATIVE PERFORMANCE OF FINANCIAL MEASUREMENT, BUSINESS DEVELOPMENT AND TREND ANALYSIS OF ISLAMIC AND CONVENTIONAL BANKS IN INDONESIA DURING AND AFTER GLOBAL FINANCIAL CRISIS PERIOD OF 2007-2014: A COMPARATIVE ANALYSIS

Abstract

AbstractThe purpose of this study is to analyze and compare the performance of Islamic and conventional banking in Indonesia during and after global financial crisis period of 2007-2014 and to find out which of the banking stream is performing better than other. For this study, sample of 6 conventional banks and 6 Islamic banks were selected. For in-depth understanding and sound comparison, key performance analysis used in this study includes measure of differences in performance of Islamic and conventional banks in terms of profitability, liquidity, solvency and business development. Eleventh financial ratios were used to gauge profitability, liquidity and solvency. Trend analysis tool is also used to check the trends of balance sheet and income statement. Findings suggest in terms of profitability, during global crisis Islamic banks leads, while after global crisis conventional banks show up. In term of liquidity conventional banking leads Islamic banks during and after global financial crisis, while in solvency maintenance Islamic banking dominates during global crisis and have same performance after global crisis. In business development, Islamic banks more develop than conventional during and after global financial crisis. The trend analysis reveals the good trend of balance sheet of Islamic bank while in income statements there is no meaningful difference. The statistical results indicate that there are statistically significant differences between the two types of banks, as far as liquidity and business development ratios are concerned; however, there are no statistically significant differences in profitability and solvency. Keywords: Financial measurement, Business Development, Trend Analysis, Islamic Banks, Conventional Bank