ABSTRACT

Nurhasanudin, 1113046000033, The Effect of Competition, Capital Buffer, Income Diversification, and Size of Bank on Stability of Islamic Bank in Indonesia. Sharia Economics Studies Program, Economics and Business Faculty, State Islamic University (UIN) Syarif Hidayatullah Jakarta, 2017.
The objective of this study aims to analyse the effect of competition, capital buffer, income diversification and size of bank on stability of islamic bank using the latest panel data, totalling 11 islamic commercial banks in Indonesia covering the period between 2012 and 2016. The method to explain this study is panel regression using fixed effect model. Generalized least square with cross section weight is applied for fullfilling classical assumption.
The result presents evidence that competition, capital buffer, and size of bank improve the stability significantly when the level of them increases, but in the other side, income diversification has no siginificant effect on the stability. The result also shows that the value of the coefficient of determination of the regression model is  0.979 or 97.9% which indicates that the independent variables (competition, capital buffer, income diversification, and size of bank) simultaneuously affect the dependent variable (stability) of 97.9% and the remaining 2.1% are influenced by other variabels not included in the study.  In addition, the core findings support competition-stability view and charter value theory but reject the too-big-to-fail notion.
Keyword: Stability, Competition, Capital Buffer, Income Diversification, and Size of Bank.
 

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