The Relationship between Market Structures, Strategy, and Islamic Bank

Performance: Effect of the Financial Crisis

Dety Nurfadilah1*, Abdul Rivai2, and Sudarmawan Samidi3s

123
Universitas Krisnadwipayana, Indonesia
*Corresponding author email: detynurfadilah@gmail.com

Abstract

The rapid growth of financial system in Indonesia creates an intensive competition

between Conventional and Islamic Banks. Both bank tries to be more financially
accessible than others by increasing the innovation of some products to gain higher
market share. The purpose of this study is to evaluate the relationship between market
structure, strategic choice and Islamic bank performance after the financial crisis. This
study applies path model to analyses the data. The data was collected from 11 Islamic
Banks in Indonesia during 2011 – 2015. The expected result is when there is high
capital structure, the performance of bank and cost efficiency is also high, whereas
when there is low capital structure, the performance of bank and bank efficiency is
also low. To the best of author’s knowledge, it is the first study to evaluate the
performance of Islamic Banks using path analysis.

Keywords: Path analysis, Islamic Bank, Market Structures, Bank Performance,

Indonesia.

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