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Financial intermediation costs in a dual banking system: the role of Islamic banking

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dc.contributor.authorSiong Hook Law
dc.contributor.authorMansor H. Ibrahim
dc.date.accessioned2021-07-28T02:55:20Z
dc.date.available2021-07-28T02:55:20Z
dc.date.issued2019
dc.description.abstractThis paper empirically analyses the role of Islamic banking in financial intermediation costs as measured by net interest margins for a leading dual banking country, Malaysia. Controlling for theoretically motivated determinants of the margins, the paper compares the interest/financing margins of conventional and Islamic banks and examines the impacts of Islamic banking presence on bank margins. The analysis provides evidence of the higher margins of Islamic banks compared to those of conventional banks. Further, the difference in bank margins between the two types of banks can be attributed to differences in market power, operating costs, and diversification. Finally, Islamic banking presence or penetration, as represented by the ratio of Islamic financing to aggregate bank credit/financing and, alternatively, the share of Islamic banking assets, is robustly associated with lower bank margins, on average. These results bear important implications for the development of the Islamic banking industry and in fostering the efficient allocation of financial resources by the banking system.en_US
dc.identifier.citationIbrahim, M. H. & Siong, H. L. (2019). Financial intermediation costs in a dual banking system: the role of Islamic banking. Bulletin of Monetary Economics and Banking, 2 (4), pp. 529-550.en_US
dc.identifier.doihttps://doi.org/10.21098/bemp.v22i4.1236
dc.identifier.urihttps://ikr.inceif.org/handle/INCEIF/3406
dc.languageEnglish
dc.language.isoengen_US
dc.publisherBank Indonesia Instituteen_US
dc.rights2019. Bank Indonesia Institute
dc.sourceSEDONA
dc.subjectInterest marginsen_US
dc.subjectDual banking systemen_US
dc.subjectMalaysiaen_US
dc.titleFinancial intermediation costs in a dual banking system: the role of Islamic bankingen_US
dc.typeJournal Articleen_US
dlc.maintopicIslamic bankingen_US
dspace.entity.typePublication
ikr.doctypeScholarly Works
ikr.topic.maintopicIslamic bankingen_US
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