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Achsani, Muhammad Nur Faaiz Fathah

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Author-ID : 1808832

Religion Decision Sciences, Operations Research & Management Economics, Econometrics & Finance

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Determinant of Indonesian Banking Profitability: Case Study Dual Banking System Achsani, Muhammad Nur Faaiz Fathah; Kassim, Salina
International Journal of Islamic Economics and Finance (IJIEF) Vol 4 (2021): IJIEF Vol 4 (SI), Special Issue: Islamic Banking
Publisher : Universitas Muhammadiyah Yogyakarta

Islamic banking is considered as the perfect alternative of the current conventional financial system.Â However, there is still a huge amount of criticisms in terms of its practice, with many claims that Islamic banking and finance simply replaces conventional banking terminology and offers near-identical services to its clients but at a higher cost. The objective of this study is to make a comparative empirical assessment on the determinants of profitability between the Islamic and conventional banks in Indonesia. The panel data regression is applied to analyze the relationship between profitability indicators and both industry and country level characteristics. As far as the author knows, only few studies compare the profitability of Indonesian Islamic banks and conventional banks, especially in using econometrics approach. From the empirical result in the combined model, it is known that conventional banks are more profitable than Islamic banks. Compared to the combined regression, there is no significant difference in terms of significance of the independent variables and its relationship with the dependent variable for the conventional bank regression. Conventional banks are more familiar for the community due to the long operation compared to Islamic banks. Socialization needs to be done with some approach starting from mosques and Islamic schools. The development of supporting industries such as halal industry and halal tourism are also important to increase the demand for Islamic banking product. Beside increasing the demand, efforts to increase the economics of scale is also important with various efforts such as merger or acquisition.

Determinant of Indonesian Banking Profitability: Case Study Dual Banking System Achsani, Muhammad Nur Faaiz Fathah; Kassim, Salina
International Journal of Islamic Economics and Finance (IJIEF) Vol 4 (2021): IJIEF Vol 4 (SI), Special Issue: Islamic Banking
Publisher : Universitas Muhammadiyah Yogyakarta

Islamic banking is considered as the perfect alternative of the current conventional financial system.Â However, there is still a huge amount of criticisms in terms of its practice, with many claims that Islamic banking and finance simply replaces conventional banking terminology and offers near-identical services to its clients but at a higher cost. The objective of this study is to make a comparative empirical assessment on the determinants of profitability between the Islamic and conventional banks in Indonesia. The panel data regression is applied to analyze the relationship between profitability indicators and both industry and country level characteristics. As far as the author knows, only few studies compare the profitability of Indonesian Islamic banks and conventional banks, especially in using econometrics approach. From the empirical result in the combined model, it is known that conventional banks are more profitable than Islamic banks. Compared to the combined regression, there is no significant difference in terms of significance of the independent variables and its relationship with the dependent variable for the conventional bank regression. Conventional banks are more familiar for the community due to the long operation compared to Islamic banks. Socialization needs to be done with some approach starting from mosques and Islamic schools. The development of supporting industries such as halal industry and halal tourism are also important to increase the demand for Islamic banking product. Beside increasing the demand, efforts to increase the economics of scale is also important with various efforts such as merger or acquisition.

The Effect of Bank Syariah Indonesia Merger on Financing in Indonesia Achsani, Muhammad Nur Faaiz Fathah; Irfany, Mohammad Iqbal
Ekonomi Islam Indonesia Vol. 7 No. 1 (2025): Ekonomi Islam Indonesia
Publisher : SMART Insight

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.58968/eii.v7i1.587

This study aims to examine the impact of the merger of three state-owned Islamic banks on financing in Indonesia’s Islamic banking sector, while also analyzing the role of macroeconomic and bank-specific factors. The study employs time-series data and applies the Auto-Regressive Distributed Lag (ARDL) bounds testing approach to analyze short- and long-term relationships between financing and various macroeconomic and bank-specific variables. The results show that in the short run, the merger did not have an immediate effect on financing, with key variables such as asset size, non-performing financing (NPF), exchange rates, and the unemployment rate significantly influencing financing. In the long run, asset size and NPF positively and negatively impacted financing, respectively, while the exchange rate negatively influenced financing. The merger itself showed no significant long- term effect, likely due to the bank focusing on internal consolidation rather than expanding financing or market share. This study provides insights into the immediate and long-term impacts of bank mergers in the context of Islamic banking, emphasizing the role of macroeconomic factors and internal consolidation processes. The findings offer valuable guidance for policymakers, regulators, banks, and stakeholders in the Islamic banking industry.

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