Competition and Financial Effects between Islamic and Conventional Banking

Abstract

This study discusses a comprehensive analysis of the effect of competition and financial effects between Islamic and conventional banks. This study conducts in Asian countries i.e., Indonesia, Malaysia, Singapore, Thailand, Philippines, Brunei. The first step, introducing a descriptive study mapping that analyzes the characteristics the main among the sharia and conventional banking sectors. Then in the second step, the competitiveness level of Islamic and conventional banks is measured using the Lerner index model. The Lerner index is a model of the implications of the market power of Islamic and conventional banks on overall financial stability in Asian countries (Indonesia, Malaysia, Singapore, Thailand, Philippines, Brunei). This study also discusses the relationship between competition and performance in the banking system in Asian countries. A study of a competition in the banking industries relate the reasons. First about the level of market power and its effect of financial stability. Second about the analyze of competition that affect the performance and efficiency of banks.