Impact of policies on islamic banking performance

Rio Darmawan Jaya Negara, Liyu Adhi Kasari Sulung

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review


This paper aims to examine the role of public policy and internal bank policies on Islamic banking performance. Profitability is used as an indicator of bank performance. Public policy is measured by political stability and regulatory quality, while internal factors are measured by size, capitalization, and liquidity. Using regression analysis, this study shows that public policy has a significant negative relationship with bank performance, while size, capitalization, and liquidity have a significant positive relationship with it. Our empirical results allow us to conclude that Islamic banking was negatively exposed to performance-dampening circumstances during the “Arab Spring” period, which fell on a highly-competitive industry. This study concerns on the originality of using political stability and regulatory quality as the new variables to measure public policy in Islamic bank.

Original languageEnglish
Title of host publicationContemporary Issues on Business, Development and Islamic Economics in Indonesia
PublisherNova Science Publishers, Inc.
Number of pages14
ISBN (Electronic)9781536168327
ISBN (Print)9781536162783
Publication statusPublished - 1 Jan 2019


  • Bank internal factor
  • Bank performance
  • Islamic bank
  • Public policy


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