Islamic Banks In Indonesia Research Articles

Ziyadah from an Islamic Perspective (Case study at BMT Al-Rifa’ie)

Islamic banking principles emerge primarily from the unequivocal prohibition of riba (usury) in the Quran. The Indonesian government has bolstered Islamic banking with legal frameworks, beginning with Law No. 7 of 1992, later replaced by Law No. 10 of 1998, providing a robust legal basis for its operations. The evolution of Islamic banking in Indonesia started with the establishment of Bank Muamalat Indonesia (BMI) on November 1, 1991, which catalyzed the rise of Islamic financial institutions such as Baitul Maal Wa Tamwil (BMT). Interest (riba) is forbidden in Islam due to the additional or ziyadah interest charged on loan transactions. BMT, operating as an Islamic financial institution, eschews interest in favor of profit-sharing systems. The Indonesian Ulema Council (MUI) has issued several fatwas related to ziyadah, including MUI Fatwa No. 1 of 2004. This research, conducted at BMT Al-Rifa’ie, adopts a qualitative approach with a historical hermeneutic analysis. Informants include seven individuals from management, customers, and the MUI. The study concludes that the ziyadah practices at BMT Al-Rifa’ie align with Islamic principles.

Analysis of Islamic Economic Principles in Financial Technology in Indonesian Islamic Banking

The purpose of this research in to provide an overview of the implementation of financial technology in the mobile banking system owned by Bank Muamalat Indonesia and what Islamic economic principles are used in its implementation. The research method uses a qualitative with type of case study at the Lamongan sub-branch office, East Java, Indonesia. The result of the research is the implementation of financial technology in Islamic Banking namely Bank Muamalat Indonesia by features. The principle of Islamic economics applied is not to make transactions that contain riba, gharar, maysir, tadlis, riswah and isyraf in financial technology services with Muamalat DIN features found in mobile banking.

The Effect of TPF, NPF and CAR on Profitability with Financing as an Intervening Variable in Indonesian Islamic Banks during the Covid-19 Pandemic

The aim of this research is to determine the effect of TPF, CAR, NPF on profitability with financing as an intervening variable. This research uses a quantitative type of research using PLS analysis. This research uses quantitative research. The research was conducted during the Covid 19 pandemic in 2020, quarter 4 to 2022, quarter 1. The data population for this research was 14 Islamic commercial banks during the Covid 19 pandemic. The sampling method used was purposive sampling, namely using several criteria for the 5 Islamic commercial banks that were sampled. Study. The results that influence this research are NPF on profitability, CAR on profitability and TPF on financing. The high value of Third Party Funds (TPF), Non Performing Finance (NPF), and Capital Adequacy Ratio ( CAR) will affect the business activities of the banks, which will certainly affect the level of profitability. Meanwhile the most important and largest bank business activity is financing.

Gold-based housing financing model: proposing an alternative housing financing model for Islamic bank

Purpose This paper aims to propose a new housing finance mechanism through gold price as an alternative to interest rate in Islamic home financing, especially on Bai’Bithaman Ajil (BBA) contract. Design/methodology/approach This study using simulation approach to calculate the monthly installments for home financing using gold price references. In simple terms, propose a financing formula in the BBA contract by converting the selling price of the house to the gold price, and then the monthly installments also follow the actual gold price. The authors provide an example by simulating this formula using historical data and cases of housing financing at Indonesian Islamic banks. The authors compare housing financing models based on gold prices and interest rates. Finally, The authors can compare the two housing financing models that are affordable for low-income people. Findings The results show that in the initial period, monthly installments of BBA based on gold price were lower than home financing based on interest rate. This result makes it possible for low-income people who cannot access financing based on interest rates to access financing based on gold price. However, the total installments of financing based on gold prices are higher than the financing model based on interest rates. Research limitations/implications The paper confines one contract, namely, BBA, as it is claimed to be more Shariah-compliant than others. Practical implications These findings suggest an alternative model for Islamic banks and regulatory authorities in Indonesia to replace the interest rate reference with the gold price in BBA contract housing financing. This model can offer competitive advantages for Islamic banks, including lower initial installments and inflation-protected profits, serving as a means of differentiating them from conventional banks. Social implications Gold price-based housing financing model in Islamic banks will increase the affordability of housing financing for low-income people. Originality/value This paper tries to solve two problems, namely, first, the problem of assuming that Islamic and conventional banks are the same, and second, the problem of housing finance affordability. This study needs to be explored.

Determinants Of Islamic Bank Financing During Economic Turbulence

The Covid-19 outbreak has caused turbulence in Indonesia's economic growth, thereby disrupting the performance of Islamic banks, especially in the distribution of financing. This research examines the influence of economic turbulence, third-party deposits, bank size, capital and profitability on financing disbursed by Islamic banks in Indonesia. The population of this research is Islamic commercial banks in Indonesia in the 2017-2022 period. The sample selection used a purposive sampling method and obtained ten Islamic banks. The data analysis technique uses panel data analysis with a fixed effect model. The research results prove that third-party deposits positively and significantly impact financing, while bank size and capital negatively and significantly impact financing. However, economic turbulence and profitability do not affect financing. When financing is divided based on contracts, economic turbulence negatively impacts profit-sharing-based financing, and profitability negatively impacts receivables-based financing. These findings can be a reference for Islamic banks to maintain the availability of third-party deposit funds to support financing expansion and further optimize their capital by channelling it to more productive assets in the form of financing. These findings can complement existing theories and support the business cycle theory that Islamic banks tighten financing based on profit sharing, which carries higher risks.

Good Corporate Governance Toward Financial Performance Of Islamic Bank In Indonesia

This research aims to analyze the influence of good corporate governance (GCG) on the financial performance of Islamic banks in Indonesia. This study uses a quantitative approach. The population in this research is 16 Islamic banks registered with the Financial Services Authority (FSA) for the 2021-2022 period. The sample used was 10 Islamic banks that issued quarterly report data. Sample selection was carried out using the purposive sampling method. The data collection technique uses secondary data in Islamic bank documentation and is processed using the SPSS 25 application with multiple linear regression tests. The results of this research are that the board of commissioners has a negative effect on the financial performance of Islamic banks, and the board of directors has a positive effect on the financial performance of Islamic banks. In contrast, the Sharia supervisory board does not affect the financial performance of Islamic banks. Theoretical research can complement existing theories and be a reference for future research. This research can be a reference for Islamic banking in analyzing corporate governance standards to provide investors with more knowledge and understanding about the financial performance of Islamic banking and enable investors to make the right decisions.

Islamic Bank Performance Assessment Using SATF Value

This study aims to evaluate the performance of Islamic banks based on the shidiq, amanah, tabligh, and fathona (SATF value) approach. The type of research is descriptive quantitative using secondary data. The research population is all Islamic Commercial Banks (ICB) operating in Indonesia for 2018-2022. The sampling technique uses saturated samples. The data combines ICB annual financial reports issued by the Financial Services Authority (FSA) and literature studies. The data analysis technique uses simple additive weighting (SAW). The research results show that Shidiq's performance shows high public confidence in Islamic bank savings products. Amanah's performance shows that the distribution of financing and carrying out responsibilities to bring benefits still need to be higher. Tabligh's performance shows that the level of Islamic compliance carried out by banking operations is Islamic. Fathona's performance shows that Islamic banking still needs to be optimal in increasing human resources (HR) capability or quality. Overall, the results of evaluating the performance of Islamic banking in Indonesia using the SATF value model during 2018-2022 are entirely satisfactory, with the SATF performance value increasing from year to year. The results of this research can be a reference for future research and provide valuable guidance for maintaining and improving Islamic banking performance while actively correcting any identified weaknesses or deficiencies.

The impact of bank’s diversity and inclusion index on profitability: evidence from Indonesia and Malaysia

The impact of bank’s diversity and inclusion index on profitability: evidence from Indonesia and Malaysia

Bank ownership and credit risk: an empirical study of Indonesian Islamic local banks

Purpose This study aims to determine the effect of bank ownership on the credit risk of Indonesian Islamic local banks (ILBs). Design/methodology/approach This study uses the system generalized method of moments (GMM) estimation technique with a sample of 155 Islamic local banks in Indonesia from 2012 to 2019. Findings The results show that commissioner board (D.COW) ownership has a negative effect on credit risk. This indicates that an increase in the number of shares of Islamic local banks owned by the commissioner board reduces credit risk. On the other hand, government ownership (D.GOW), the Sharia supervisory board (D.SOW) and the director board (D.DOW) do not affect credit risk. Practical implications The government, Sharia supervisory board and director board need opportunities to easily own more Islamic local bank shares. Therefore, the provisions regarding the share ownership rights of the government, Sharia supervisory board and director board need to be improved to increase their role in reducing credit risk. Originality/value Previous researchers have not studied the effect of government ownership, the commissioner board, the Sharia supervisory board and the ownership of directors on credit risk at the ILB in Indonesia.

The Innovation of Products and Services of Islamic Banks in Indonesia: the Optimal Role of Sharia Supervisory Board in The Industry 5.0 Era

The innovation of banking products and services has seen significant growth. However, the pace of innovation in product and service offerings within Islamic banking has been comparatively slower. Make it a challenge for Islamic banking, particularly the Sharia Supervisory Board (SSB), to fulfill a dynamic role. The research aims to enhance the role of the SSB in encouraging innovation in Islamic banks, particularly in the context of the industrial era 5.0. The study employs a qualitative method with ethnographic techniques, including observations and interviews with stakeholders such as the SSB, Islamic bank employees, customers, and academics. The research findings indicate that the performance of Islamic banking has improved, but it needs to be more innovative to compete in the industrial era 5.0. This can be achieved by increasing the development of products and services, such as e-money, that have high bargaining power. The role of the SSB in Islamic banking must be more optimal, involving improving the quality and quantity of human resources, issuing opinions on needed products and services, conducting continuous monitoring, and strengthening detailed supervision. Furthermore, SSB and Islamic banking must synergize with each other in improving products and services to remain competitive in the industrial era 5.0. The study concluded that the optimal role of SSB plays an important role in driving innovation in Islamic banking.

Dispute Resolution of Problem Financing in Indonesian Islamic Banks by Basyarnas

Dispute Resolution of Problem Financing in Indonesian Islamic Banks by Basyarnas

Islamic banks' contribution to Indonesia districts' economic growth and poverty alleviation

PurposeThis research investigates the Islamic banks’ intermediation role (e.g. branches and deposits) in financing. It also examines how financing contributes to the regions' economic growth and poverty alleviation as a predictor and mediator variable.Design/methodology/approachA total of 297 observations were extracted from 33 Indonesian districts and 14 Islamic banks during the period 2012–2020. Fixed-effect regression analysis was used to examine variable’s interactions.FindingsThe empirical results indicate that Islamic banks have adopted a channelling role towards redistributing capital from lender to borrower. Besides, there are crucial roles in developing economies and reducing poverty at the district level. This study also reinforces the critical role of financing in mediating the relationship between branches and deposits as predictor variables and GDP and poverty as outcome variables.Research limitations/implicationsThe current study was limited to Indonesian Islamic banks and the district’s perspective. Future research needs to cover sub-districts and other poverty measurements (e.g. human education and development perspectives), including conventional and Islamic banks. It can help practitioners, regulators and researchers observe the dynamic behaviour of the banking sector to understand its role in the economic and social fields.Practical implicationsBank managers and regulators should promote branches, deposits and financing. It also enlightens people about the essential role of Islamic banks and their fundamental operations in business and economics.Originality/valueThis study contributes to economic literature, bank managers and local governments' decision-making processes by developing and testing an economic growth and poverty model.

FINANCING GROWTH AND BANK RISK: EMPIRICAL EVIDENCE FROM INDONESIA

This study examines the crucial issue of the impact of financing growth on various dimensions of Islamic Banks in Indonesia. The growth of financing affects bank risk, profitability, and solvency. The main objective explains the relationship between financing growth and key performance indicators. The study uses ROA for profitability, EQTA for capital adequacy, NPF for bank risk, and the natural logarithm of Total Assets as a proxy for bank size. LIQD and CIR are included as additional variables to provide a more comprehensive analysis. Data for the period Q1 2012 to Q4 2020, obtained from the publication report on the OJK website. Using multiple linear regression, the findings showed a negative relationship between bank risk and financing growth. In addition, the growth of financing has a positive effect on both profitability and solvency of banks. This confirms the importance of prudential principles to optimize risk management strategies, especially in the context of a growing role in financing growth in Islamic banks.

Islamic and Conventional Banks Stability in Indonesia

Research Originality: The stability of banking institutions is crucial for the overall financial health of a country. The originality of this paper lies in its innovative use of quantile regression analysis to provide a nuanced understanding of the factors influencing bank stability, particularly in the Indonesian context.Research Objectives: This research identifies factors influencing bank stability in Islamic and conventional banks in Indonesia.Research Methods: Utilizing quantile regression analysis to measure the impact of various factors at different quantiles, addressing the existing mixed findings in the literature. This study utilizes 15 years of data, encompassing 61 observations for Islamic banks and 779 observations for conventional banks in Indonesia.Empirical Results: The study identifies impaired loans as the primary determinant of bank stability in Indonesia, with a notably greater impact on conventional banks compared to Islamic banks. Notably, the upper quantile of Islamic banks indicates a decline or a lesser impact on bank stability. The paper additionally concludes that the stability of Islamic banks in Indonesia is comparatively lower than conventional banks.Implications: By offering insights into the different levels of factors affecting bank stability, the study contributes to the existing literature, sheds light on unique dynamics, and highlights potential recommendations for enhancing bank stability, especially in the context of non-performing loans.JEL Classification: C21, C23, G21How to Cite:Khan, S., Aziza, N. A., & Nawaz, A. D. (2024). Islamic and Conventional Banks Stability in Indonesia. Etikonomi, 23(1), 167 – 182. https://doi.org/10.15408/etk.v23i1.33879.

Capturing Islamic bank performance in Indonesia during the COVID-19 crisis: RGEC and SCNP approaches

While adhering to the unique principle of Islamic value, Islamic banks are subject to any occurring crisis, just like other banks in common. After the end of the COVID-19 crisis, it is important to determine whether Islamic banking can demonstrate its resilience based on the unique values it upholds. Therefore, the primary objective of this study is to capture how Islamic banks performed during the unprecedented challenge posed by COVID-19. By utilizing the data generated from financial reports, this study employs the RGEC (Risk Profile, Good Corporate Governance, Earnings, and Capital) method that was introduced by Indonesia Central Bank and SCnP (Sharia Conformity and Profitability) measurement. The findings show that by utilizing RGEC, the study classifies Islamic banks into tiers of health, distinguishing 7 as very healthy, 5 as healthy, and 2 as fairly healthy. Meanwhile, SCnP sheds light on the balance between Sharia conformity and profitability, highlighting 2 Islamic banks with commendable equilibrium, 5 displaying a tilt towards high profitability and low conformity, 4 with a tendency towards Shariah conformity with low profitability, and 3 struggling with challenges in both aspects. The study concludes the overall financial resilience of the majority of Islamic banks in Indonesia during the pandemic while noting that some banks faced challenges in achieving a harmonious balance between profitability and Sharia conformity.

DETERMINANTS OF ISLAMIC BANKING FINANCIAL PERFORMANCE: ANALYZING THE ROLE OF CSR, ZAKAT, AND GCG IN INDONESIA AND MALAYSIA

Although the Islamic banking sector is expanding rapidly, it still needs to improve its financial performance in order to compete with conventional banking. This study attempts to investigate how corporate social responsibility (CSR), zakat, and good corporate governance (GCG) affect the financial performance of Islamic banking in Indonesia and Malaysia from 2015 to 2021. Using the quantitative method of panel data regression, the study discovered that, simultaneously, CSR, zakat, and GCG have a significant impact on the financial performance of Islamic banking in both countries. Partially, only GCG has a noticeable influence while the other two do not. The results of this study encourage Islamic banks to consistently develop CSR, zakat, and GCG in every aspect of their operations and lead the industry.

Market Concentration, Bank Characteristics, Macroeconomic Conditions, and Indonesian Islamic Bank Financing

As the latest player in the banking market in Indonesia, Islamic banks are not as experienced as their counterpart conventional banks. In addition, the types of Islamic bank financing (loans) are different from conventional bank loans. Our work investigates the determinants of Islamic bank financing in Indonesia. Our concern variables are market concentration, bank fundamentals, and macroeconomic conditions, including Covid-19. This study examines all Islamic banks in Indonesia from 2015 to 2020 using quarterly data. Our data set is 724 observations with unbalanced panel data. We employ the dynamic panel data using the two-step system GMM that is more robust than two-step difference GMM. Market concentration encourages financing. Profitability, bank size, and financing loss provision also enhance financing. However, a high degree of risk aversion and inefficiency reduces financing. Furthermore, Islamic bank financing also depends on macroeconomic conditions. Economic upturns strengthen financing. Strong bank fundamentals, particularly bank size, are the key to success for Islamic bank financing. The results draw an important practical implication. Large Islamic bank is a necessary condition to compete with a conventional bank. Accordingly, the spin off policy of Islamic bank windows to full-fledged Islamic bank should be implemented immediately.

Pengembangan Perbankan Syariah Dalam Mendukung Inklusi Keuangan di Indonesia

The purpose of this journal is to examine the evolution of Islamic banking practices as a means of enhancing financial awareness in Indonesia. In order to increase the general public's access to products and financial services that are fair, affordable, and useful, they are referred to as financial inclusion. The Islamic banking system has become a crucial alternative in the Indonesian financial system. Deskriptif analysis is the research method used in this journal. Data are obtained through relevant secondary data sources and research studies. This analysis will show how Islamic banks operate in Indonesia, how Islamic banks maintain their financial integrity, and the problems that arise when they are expanding. Research indicates that the rise in Islamic banks has helped to increase awareness of money in Indonesia. However, numerous challenges are faced by the syariah banking sector. Several of these include inadequate infrastructure, inadequate knowledge about goods and services provided by Islamic banks, and regulations that have not yet fully addressed the root causes of the problem. Due to this, the journal also offers advice on how to resolve the issue and encourage the development of more sensitive Islamic banks in Indonesia.

Comparison Of Capital Structure, Profitability, And Third-Party Funds (DPK) Between Bank Bri And Bank Syariah Indonesia: A Comparative Analysis

The banking sector plays a crucial role in the Indonesian economy, becoming the backbone that supports the country's economic growth and stability. In this dynamic landscape, two financial institutions stand out, namely Bank Rakyat Indonesia (BRI) as a representative of conventional banks, and Bank Syariah Indonesia (BSI) which is committed to Islamic financial principles. The purpose of this study is to determine the comparison of capital structure, profitability, and third party funds (DPK) between BRI banks and Indonesian Islamic banks. This research method uses the Mixed Methods Comparative method, this approach involves the collection and analysis of quantitative and qualitative data separately and at the same stage. The results of this study show that  the comparative analysis between Bank BRI and Bank Syariah Indonesia (BSI) highlights the different dynamics in the capital structure, profitability, and deposits of both. BRI, with its conventional approach, demonstrates flexibility and excellence in diversifying financial resources. On the other hand, BSI, as an Islamic bank, provides evidence that Islamic principles can provide profitability and a sustainable financial foundation. These results provide a better understanding of each bank's role in meeting the needs of society, both in terms of financial services and business ethics principles. Stakeholders, including regulators, investors, and the general public, can use the results of this analysis to make informed decisions and support the sustainable growth of the banking sector in Indonesia.TRANSLATE with x EnglishArabicHebrewPolishBulgarianHindiPortugueseCatalanHmong DawRomanianChinese SimplifiedHungarianRussianChinese TraditionalIndonesianSlovakCzechItalianSlovenianDanishJapaneseSpanishDutchKlingonSwedishEnglishKoreanThaiEstonianLatvianTurkishFinnishLithuanianUkrainianFrenchMalayUrduGermanMalteseVietnameseGreekNorwegianWelshHaitian CreolePersian //  TRANSLATE with COPY THE URL BELOW Back EMBED THE SNIPPET BELOW IN YOUR SITE Enable collaborative features and customize widget: Bing Webmaster PortalBack//

Sharia Board Characteristics, Macroeconomic Factors, and Non-performing Financing of Indonesian Islamic banks

This study examines the impact of Islamic board characteristics (SB) and macroeconomic factors on the Non-performing financing (NPF) of Islamic commercial banks (ICB). The sample of this study consisted of 14 ICBs in Indonesia from 2010 to 2021. In this study, data estimation used a one-step GMM System model. SB features such as SB Size and SB Woman were found to have a detrimental impact on NPF. GDP per capita, for example, negatively affects NPF, while inflation has a positive impact. However, this study could not show the impact of SB characteristics such as expertise and proximity of SB to NPF. The study also found that macroeconomic factors such as annual open unemployment and interest rates showed an insignificant negative influence on NFP. The findings of this study help regulators, investors, and management of Islamic banks better understand the impact of SB characteristics and macroeconomic factors on Non-performing financing (NPF) of Islamic banks, especially in the context of ICB in Indonesia. In addition, it is expected to inspire similar research in the future.