Islamic Banking Industry In Indonesia Research Articles

CONVERSION INTO FULL-FLEDGE ISLAMIC BANKS AND IT’S IMPACT ON ASSET: EVIDENCE FROM INDONESIAN ISLAMIC BANKING INDUSTRY

Objective: This study aims to analyze whether the number of assets differs before and after conversion to an Islamic bank. Theoretical Framework: The theoretical framework provides relevant information on Islamic banking and market structure, which forms the basis for the development of hypothesis. Method: Using regression analysis with dummy variables, the study found differences in assets between the pre and post-conversion periods. Results and Discussion: The findings suggest that conversion could be a recommended approach for the Islamic banking industry in Indonesia to accelerate asset growth. Additionally, it offers an optimal solution for smaller-sized conventional banks as an alternative to spin-offs or mergers. Research Implications: This research provides significant contributions to the study of Islamic banking. This research has the implication that conversion can be an alternative strategy for small parent banks. Originality/Value: Several conventional banks in Indonesia have chosen full conversion into Islamic banks as an exit strategy. This decision is in addition to the spin-off option. Bank of Aceh, Bank of NTB and Bank of Riau Kepri completed the full conversion in 2016, 2018 and 2022, respectively. However, research on Islamic bank conversion is still limited.

DOES CONVERSION INCREASE DEPOSIT FUNDS IN ISLAMIC BANKS IN INDONESIA? THE CASE OF BANK OF ACEH AND BANK OF NTB

This study examines the effect of the conversion strategy on deposit funds in converted banks. One of the concerns when converting to an Islamic bank is the transfer of customers to conventional banks. This condition underlies this research to be conducted. Using panel regression analysis, this study found a positive difference in the number of deposited funds after the conversion. This fact shows that the concern about transferring customers after the conversion has not been proven. There was an increase in deposit funds after the conversion strategy was carried out at the two converted banks. This finding has implications that the conversion strategy can be carried out at regional banks that have a small size and are supported by the local government and the people in the area. The findings of this study contribute significantly to the development of the Islamic banking industry in Indonesia that conversion to Islamic banking is an alternative corporate strategy besides spin-offs and mergers.

Ijarah Contracts From The Time Of Rasulullah To The Present Day

The Islamic banking industry in Indonesia continues to experience significant development. With this development, innovation in products and services in Islamic banking is very important to answer the needs in contemporary banking and financial transactions. One of the many products that have been applied and developed is ijarah. However, practitioners and scholars are still discussing different points of view regarding the legal basis of ijarah and its types. This research aims to review the development process of the ijarah principle and its variance from the early Islamic period to the present. This study is a qualitative research with a literature study approach and library research with descriptive analysis. This research concludes that, The concept of ijarah has existed since the time of the apostle of Allah, namely with the wage system given by the Rasulullah for the services received. For its application in the industry, there are 2 main products, namely Ijarah Muntahiya Bittamlik (IMBT) and Ijarah Maushufah Fi Al Dzimmah (IMDF).

Analisis Perbandingan Kinerja Keuangan Perbankan Syariah Yang Melantai di Bursa Efek Indonesia : Studi Kasus Perbandingan Kinerja Keuangan Bank Syariah Indonesia dan Bank BTPN Syariah

"The Islamic banking industry in Indonesia has experienced rapid growth in recent years. Bank Syariah Indonesia (BSI) and Bank BTPN Syariah are two leading Islamic banks in Indonesia. However, in the post-pandemic era, there has been limited research comparing the financial performance of these two banks. Therefore, this research aims to analyze the financial performance comparison of Islamic banking institutions that have publicly listed their shares on the Indonesia Stock Exchange, namely Bank Syariah Indonesia and Bank BTPN Syariah. The objective of this research is to compare the financial performance between Bank Syariah Indonesia and Bank BTPN Syariah and provide recommendations for investors interested in investing in the Islamic banking sector. This research uses a descriptive-comparative method with a quantitative approach. The data used is secondary data obtained from the financial reports of both banks for the last two years (2021-2022). The measured variables include return on equity (ROE), return on assets (ROA), and price-to-earnings ratio (PER). The data obtained is analyzed using statistical analysis techniques such as t-tests, F-tests, and regression analysis."

Manajemen Aset dan Liabilitas dalam Bank Syariah: Analisis Komprehensif Institusi Keuangan Berprinsip Syariah

The Islamic banking industry in Indonesia, since the establishment of Bank Muamalat Indonesia in 1991, has experienced rapid growth, reaching its peak in 2019. This growth is evident not only in financial aspects but also involves a broader performance assessment, including Sharia principles and organizational governance. The assets of Islamic banks have achieved remarkable milestones, strengthening Indonesia's position as a key player in the global Islamic banking arena. New approaches such as the Sharia Maqhasid Index (SMI) highlight the attainment of Sharia goals, while fund management and the phenomenon of mergers between BRIS, Mandiri Syariah, and BNI Syariah forming Bank Syariah Indonesia (BSI) underscore the urgency of assessing asset liability management in the context of sustainability in Indonesia's Islamic banking sector.

Internal Variables and Macroeconomic Factors as Determinants of Profitability in Islamic Banking Indonesia

The purpose of this research was to analyse the influence of internal and macroeconomic variables on the profitability of the Islamic banking industry in Indonesia. A panel data regression approach, applying fixed effect and common effect models in order to to address potential biases in the estimation was used. The research sample consisted of five Islamic banks and covered the period from Q1 to Q4 of 2022. Chow test and Lagrange multiplier test were used to compare the analysis results. The used control variables included financing quality, financing to deposit ratio, exchange rate, and gross domestic product growth. The research was also based on economic, efficiency, and productivity theories in Islamic banking. Findings, The research results showed that the Islamic banking industry in Indonesia was increasingly compliant with prevailing regulations. The Bank Indonesia's policy interest rate (BI rate) did not significantly influence the profitability. Inflation had a negative impact on profitability, while the capital adequacy ratio showed a non-linear effect. All tested control variables exhibited an influence on profitability. Financing quality and exchange rate had negative impacts, while liquidity and economic growth had positive impacts on the profitability of the Islamic banking industry in Indonesia. The novelty of the paper is visible in the panel data regression approach that uses fixed effect and common effect models and provides an effective way to address estimation bias. Additionally, this research identified control variables that have a significant impact on profitability, including financing quality, liquidity, exchange rate, economic growth, and capital adequacy ratio to present breakthroughs and innovations.

Stacked LSTM-GRU Long-Term Forecasting Model for Indonesian Islamic Banks

The development of the Islamic banking industry in Indonesia has become a significant concern in recent years, with rapid growth in the number of banks operating based on Sharia principles. To face emerging challenges and opportunities, a deep understanding of the long-term financial behavior of Islamic banks is becoming increasingly important. This study aims to predict the share price of PT Bank Syariah Indonesia Tbk, over 28 days using the LSTM-GRU stack. The observation stage includes importing the dataset, data separation, model variations, the training process, output, and evaluation. Observations were conducted using 10 model variations from 4 stacks of LSTM and GRU. Each model performs the training process in four epochs (200, 500, 750, and 1000). The results of observations in this study show that long-term predictions (28 days ahead) using four stacks of LSTM-GRU and daily training accumulation techniques produce better accuracy than the general method (using multiple outputs). From the observations we have made for predictions for the next 28 days, the model with the LGLG stack arrangement (LSTM-GRU-LSTM-GRU) produces the best accuracy at epoch 750 with an MSE LSTM-GRU 63.43762863. This study will undoubtedly continue in order to achieve even better precision, either by utilizing a new design or by further improving the technology we are now employing.

Shariah board governance and sustainability performance: analysis of sharia banking in Indonesia

This study aims to investigate the relationship between sharia governance and sustainability performance in the Indonesian Islamic banking industry. Sharia governance is measured by the sharia supervisory board (SSB) score and the individual attributes of its members (size, number of meetings, educational background, and diversity). Sustainability performance (SP) is proxied by its economic, environmental, and social dimensions, as defined by the Global Reporting Initiative (GRI) framework. Secondary data from 2010—2020 company reports are used and analyzed using manual content analysis. Panel data regression is also employed to test the hypotheses and identify which individual attributes of the SSB influence sustainability performance. The results show that the SSB has a positive and significant effect on Indonesia’s overall SP of Islamic banking. Among the individual attributes, the frequency of SSB meetings has a positive and significant effect on overall SP, while the diversity of SSB members negatively affects economic and social SP. Meanwhile, SSB member’s size and educational background do not affect overall SP. The findings are expected to enhance understanding of Islamic bank’s development and approaches to addressing sustainability-related issues of Islamic bank. This study also contributes as consideration in the improvement of standard practices or the current implementation of sharia governance in Indonesia and to promote sustainable operations through Islamic corporate governance.

Scenario Planning of Islamic Banking Industry Development in Indonesia

Islamic banking has become known in Indonesia since the operation of Bank Muamalat Indonesia, which was initiated by the Association of Indonesian Muslim Intellectuals (ICMI), the Indonesian Ulama Council (MUI) and the government, in 1992. The large number of Islamic banking players existing now in fact does not automatically boost the growth of the market share of Islamic banking assets to total bank’s assets in Indonesia. Islamic banking had experienced a trap of 5% market share for quite a long time before finally being able to pass it in 2016 and reached 7,03% in August 2022. The purpose of this study is to provide strategy through scenario planning for the development of the Islamic banking industry in Indonesia so that it can add insight and alternatives for all relevant stakeholders. This research will use a qualitative research methodology that uses primary data and secondary data. Scenario planning is developed based on the results of an analysis of the driving forces which are considered as critical uncertainties. The driving forces themselves are obtained based on the results of an analysis using the Porter's 5 Forces framework, PESTEL and SWOT (Strength, Weakness, Opportunity, Threat) analysis to find out its relevancy. These driving forces were then discussed through in-depth interviews with respondents to determine which were the most critical (Critical Uncertainties). Two critical uncertainties defined during this study are Government and Regulations Support as well as Prices and Services. Four (4) scenarios are built using those two critical uncertainties following the scenario planning methodology. The scenarios are called Fast and Furious, Imperfect, The Survivor, and The Skyfall.

Stability, Liquidity, Efficiency, and Profitability After Spin-off Implementation: Evidence from Indonesian Islamic Banking Industry

Stability, Liquidity, Efficiency, and Profitability After Spin-off Implementation: Evidence from Indonesian Islamic Banking Industry

ORGANIZATIONAL CHANGES AND THE IMPACT ON THE PERFORMANCE OF SHARIA BANK EMPLOYEES THROUGH AFFECTIVE COMMITMENT

Organizational changes in a company often bring significant impact. One of the impacts that may arise due to organizational changes is decreasing employee performance. In the Islamic banking industry in Indonesia, one of the banks that has made organizational changes is Bank Syariah Indonesia (BSI). For this reason, it is necessary to pay attention to strategies in dealing with these changes so that changes can run well. One way to improve employee performance is to increase employee affective commitment to the company. This study aims to determine the relationship of organizational change to employee performance mediated by affective commitment. Respondents in this study were employees of Bank Syariah Indonesia (BSI) who had worked before and after the merger. The data collection process was carried out online to 165 employees of Bank Syariah Indonesia (BSI) and then analyzed using the Structural Equation Modeling (SEM) method through the SmartPLS 3.2 application. This study proves that organizational change has a negative effect on affective commitment, while affective commitment has a positive effect on employee performance. In addition, this study also proves that affective commitment is able to mediate a negative relationship between organizational change and employee performance. Therefore, employees need to increase their affective commitment in order to improve performance so as to support organizational change.

Islamic Banks: Study of Financial Literacy, Digital Marketing, Accessibility, Age, and Education

The emergence of the Islamic banking Industry in Indonesia up to now has not escaped from challenges and problems, among the main ones is how Islamic banks are leading the market share by increasing customer interest in using Islamic banking services. Quantitative methods were used in this research with a sample of 100 respondents of Islamic bank customers who lived in a special region of Yogyakarta which was selected by using a purposive sampling approach, and multiple linear regression by using SMART PLS 2.0. applied as the tools of analysis. The result shows that financial literacy does not affect the interest in becoming Islamic customers. Meanwhile, digital marketing and accessibility do affect the interest in becoming Islamic bank customers. Then, age and education as moderating variables are not able to moderate financial literacy, digital marketing, on interest in becoming Islamic bank customers. The practical implications of this research suggest that marketers can make more informed decisions, such as intensifying promotional efforts on digital platforms and enhancing customer accessibility. Additionally, this study recommends further research to address the limitations by including cybersecurity perceptions as a moderating variable. By doing so, the research will be able to provide a more comprehensive understanding of the subject matter.

Dispute Resolution in Indonesian Islamic Banking: Previous Trends and Future Perspectives

Currently, the legal environment for dispute resolution in the Islamic banking industry in Indonesia is not sufficient to achieve the main purpose of establishing a bank. Although Islamic legal frameworks are important for resolving financial disputes recognized under classical Islamic law, this paper aims to overcome increasing disputes as Islamic banking revenues increase. , provides arguments and solutions for resolving Islamic banking disputes using the Engel curve theory of microeconomics. Therefore, changes in the income of Islamic banks in Indonesia do not significantly affect changes in alternative dispute resolution/ADR requests. Even if the demand for ADR continues to grow, the demand for ADR will be relatively smaller than the change in Islamic banking earnings. The legal framework is dispute resolution in the Islamic banking industry based on the alternative dispute resolution (ADR) process that Prophet Muhammad has demonstrated since his stay in Medina. Conclusion; With this in mind, the Islamic banking services industry is saved from litigation domination that always comes with negative stereotypes about unnecessary payments.

Islamic corporate sustainability practices index aligned with SDGs towards better financial performance: Evidence from the Malaysian and Indonesian Islamic banking industry

Exploring the link of corporate sustainability practices towards financial performance remains an area of interest to many scholars. But still, the Islamic perspective of the nexus is over sighted. In this vein, the main objective of this study is to inquire about the nexus of corporate sustainability practices towards financial performance from an Islamic perspective. However, the major challenge in this regard is the unavailability of an Islamic corporate sustainability index. To cope with the challenge, this study developed a novel Islamic corporate sustainability practices index and aligned it with sustainable development goals for greater generalizability and better financial performance. The study collected 10 years of panel data (2009–2018) for 16 Islamic banks in Malaysia and 12 Islamic banks in Indonesia. Panel corrected standard errors regression technique was used to analyse panel data. Results were first generated on the combined dataset including both Malaysia and Indonesia, and then from individual countries' perspectives to obtain a holistic point of view. Furthermore, results are also generated on Islamic corporate sustainability practices as a formative factor as well as a reflective factor indicating (environmental, economic and social) dimensions. Results of panel corrected standard errors regression analysis show that Islamic corporate suitability practices as a formative factor have a significant positive impact on financial performance from the combined as well as the separate dataset from Malaysia and Indonesia. However, results of the reflective factors of Islamic corporate sustainability practices show variation in the combined (Malaysian and Indonesian) dataset. These results provide insights into various policy formulations at Malaysian and Indonesian Islamic banks in specific. And in general, these results insights into the world Islamic banking industry for ensuring better compliance with sustainable development goals aimed at achieving greater financial performance. More importantly, this study may serve as a launching pad for the development of the global Islamic banking corporate sustainability practices index.

An analysis of market power and efficiency of Islamic banking in Indonesia and Malaysia

Purpose – This paper aims to investigate whether the Islamic banking industry in Indonesia and Malaysia is collusive or efficient. Indonesian Islamic banking is expected to meet the Qualified ASEAN Bank (QAB) to compete with other Islamic banks, including Malaysia.Methodology – The data used in this study was panel data on Islamic banking in Indonesia and Malaysia from January 2010 to December 2019. Data analysis employed static panel data regression.Findings – The findings of the study disclosed no collusive behavior from Islamic banking in Indonesia and Malaysia to increase profitability. Meanwhile, market share has been shown to boost profitability in terms of equity, despite the fact that there is an endogeneity problem. Technical efficiency and scale efficiency in Islamic banking in Indonesia have been shown to significantly increase market share, but not profitability and market power. This study concludes that if Islamic banking market in Indonesia and Malaysia are opened and state boundaries are lifted, Indonesian Islamic banking still will not be able to compete since it has not been able to acquire economies of scale.Implications – Islamic banking in Indonedia needs to establish Islamic-Finance-Friendly Regulations. It is expected to pave the way for the value-added character of Islamic banking, it is the most important strategy to boost market share of Indonesian Islamic banking.Originality – This study seeks to fill the validation gap of endogeneity test in Islamic banking. There is the limitation on studies of Islamic banks since the validation of endogeneity test deal only with conventional banking studies.

Digital Transformation in Islamic Banking

The purpose of this study is to examine digital transformation in Islamic banks. Data were obtained through a survey questionnaire from three Commercial Sharia Banks in Aceh: BSI, BCA Syariah, and Bank Aceh. A descriptive analysis was carried out to examine. First, the reasons for these Islamic banks using digitization are related to the technology used as well as the status and position in the use of digitization; second, reviewing regulations, challenges, prudential risks, and the stability implications of digitizing Islamic banking. This study found that in most Islamic Banks, in this case, Bank Syariah Indonesia (BSI), BCA Syariah, and Bank Aceh, the digitalization process is still ongoing but has gained greater traction since the COVID-19 pandemic. The main reasons for the main impetus in carrying out digital transformation include strengthening competitiveness, increasing operational efficiency, and increasing customer satisfaction. Technologies adopted include mobile and digital wallets, biometric authentication, and artificial programming interfaces. Nevertheless, the push for digital transformation has been hampered by the limitations of digital infrastructure in Islamic banking's lack of human resources and architecture. This research discovers the benefits and risks of the implications of digitalization for the stability of the Islamic banking industry in Indonesia and provides valuable recommendations for the progress of Islamic banking in particular in Aceh and Indonesia in general.

Determinant Muslim People to Adopt Islamic Bank in Indonesia

Islamic banks play an important role as a facilitator in all economic activities in the halal industry ecosystem. The existence of the Islamic banking industry in Indonesia has experienced a significant increase and development in the past three decades. This study aims to analyze the lack of public interest in saving at Islamic banks in Palopo City. The analysis is based on several factors, namely profit sharing, service quality, customer satisfaction, and loyalty. This study uses primary data collected by giving questionnaires to the people of Palopo City, with a sample of 300 respondents. The method used is a quantitative method using primary data and a numerical scale (numbers). Based on the analysis that has been done, the results show that the variables of profit sharing, service quality, customer satisfaction, and loyalty have a significant and positive effect on the low interest of the people of Palopo City in saving in Islamic banks.

Maqasid Sharia Index and Efficiency Indonesian Sharia Banking: Pre-Merger & Post Merger

This study aims to examine the impact of the merger of PT Bank Syariah in Indonesia Tbk on the level of efficiency and performance of Islamic finance in Islamic banking in Indonesia. The research period used is one year before the merger, and after the merger, in year 2019 and 2021 at Bank Umum Syariah Indonesia. This study uses a quantitative research model that uses secondary data in the form of quarterly financial reports obtained from the annual report. The data analysis used is a non-parametric approach Data Envelopment Analysis (DEA) and Maqasid Syariah Index (MSI) to measure the level of efficiency of the financial performance of the Islamic banking industry in Indonesia through three main categories of Ibn Ashur's maqashid sharia developed by Abu Zahrah, namely tahdzib al-fard ( individual education), iqamah al-adl (justice) and maslahah (welfare). The result of this study show that Islamic Financial Performance and Efficiency Level have not shown a significant increase.

Transformasi Digital Industri Perbankan Syariah Indonesia

Digital banking transformation is an important issue in the banking industry today. Digital disruption has changed the way people do business and transact. However, there are still many problems faced in carrying out digital transformation. The purpose of this study is to analyze the digital transformation process in the Islamic banking industry in Indonesia and its impact on the development and growth of Islamic banks. The research method uses descriptive qualitative approach with Systematic Literature Review. Data were collected from scientific literature references, books and reports from official institutions. The results of the study indicate that the process of accelerating digital transformation in Islamic banking is accelerated by the COVID-19 pandemic. This condition requires Islamic banking to make digital transformation a priority and strategy in an effort to increase bank competitiveness. Digital transformation has an impact on the development of Islamic banks with the increasing number of customers and total assets, many Islamic commercial banks providing digital services and the existence of Islamic banks that operate purely digitally.

Pengaruh Kinerja Keuangan Terhadap Permodalan Bank Syariah Mandiri

The financial performance seen through the ratio calculation has a relationship to the capital of Islamic banks. Bank Syariah Mandiri as the largest Islamic bank in Indonesia is a benchmark for the Islamic banking industry in Indonesia. The purpose of this study is to see the relationship between financial performance and capital adequacy of Bank Syariah Mandiri. By using secondary data from 2015-2019 and performing classic assumption tests, multiple linear regression tests, and hypothesis testing, the results showed that ROA had no significant effect on CAR. FDR has a significant negative effect on CAR. BOPO has no significant effect on CAR. NIM has no significant effect on CAR. NPF has a significant negative effect on CAR. The results of multiple linear regression analysis simultaneously show that ROA, FDR, BOPO, NIM, NPF simultaneously affect CAR