Analyzing Islamic Banks Stability: Evidence from Southeast Asia and the Gulf Cooperation Council countries (GCC)
Lina Nugraha Rani (a*), Noraini Mohd Ariffin (b), Ririn Tri Ratnasari (c), Melananda Risky Aulia (d)

a, c, d) Islamic Economics Department, Faculty of Economics and Business, Airlangga University
*linanugraha[at]feb.unair.ac.id
b) Kulliyah of Economics and Management Sciences International Islamic University Malaysia

Abstract

This study investigates the factors, specifically bank-related and macroeconomic, that influence the banking stability of 38 Islamic banks in Southeast Asian countries and the Gulf Cooperation Council (GCC) using annual data for the period from 2013 to 2020. Based on a quantitative approach with panel regression analysis, this research shows that the factors influencing banking stability in Indonesia are Assets, NPF, and GDP- in Malaysia, they are ROA, Assets, and GDP- while in the United Arab Emirates, it is only ROA, and in Qatar, it is only Assets. The implication of these results is that Islamic banks should pay attention to the Z-Score value in the preceding period. In addition, proper asset-liability management helps ensure the stability of Islamic banks. Effective macroprudential supervision must also be in place to enhance the resilience of the financial system. Furthermore, Islamic banks must maintain asset quality to avoid risks to banking stability.

Keywords: Islamic Banking Stability, Macroeconomic, Panel Regression Analysis

Topic: Islamic finance and banking