ASSESSING THE PERFORMANCE OF ISLAMIC BANKING IN BRUNEI DARUSSALAM: EVIDENCE FROM 2011-2016
DOI:
https://doi.org/10.31436/shajarah.v0i0.721Keywords:
Brunei Darussalam, Herfindahl Hirschman Index, z-score, idiosyncratic, Islamic bankingAbstract
Despite being among the earliest country offering Islamic banking to
its people, academics know little about the performance of the
industry in Brunei Darussalam. This study is aimed at fulfilling the
gap by examining the performance of Islamic banking in Brunei
Darussalam after 25 years of its establishment. However, due to
limited availability and nonuniformity of the data presentation, the
analysis is focused upon the period of 2011 to 2016. The data are
collected from secondary sources such as banks’ annual reports and
central bank’s quarterly reports for the period examined. The bank
idiosyncratic factors i.e. size, capital ratio, credit risk, liquidity risk,
service diversification, and bank stability are the cynosure of the
analysis. Descriptive statistics, Herfindahl-Hirschman Index and
z-score analysis are utilized as the tool of analysis. To make it more
interesting, the performance comparison is done between Islamic
bank and the banking industry. The result shows that evaluated
idiosyncratic factors are indicating a better performance of Islamic
banking as compared to its conventional counterpart and the overall
banking industry in the country.