SHARIA BANKING IN INDONESIA : WHAT WENT WRONG?

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Syafril, Hery and Daryanto, Wiwiek Mardawiyah (2019) SHARIA BANKING IN INDONESIA : WHAT WENT WRONG? South East Asia Journal of Contemporary Business, Economics and Law, 20 (1). pp. 45-57. ISSN 2289-1560

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Abstract

As the largest Moslem country in the world, Indonesia should have been the perfect place for Sharia Banking. With full support from: 1) the Central Bank and 2) the Financial Authority Services, Sharia Bank in Indonesia growth in number from only one full flag Sharia Bank in 1992 to fourteen Sharia Banks and twenty Sharia Business Units in 2019. However, the market share of Sharia Banking is still below six percent of total banking industry. This study aims to analyze and evaluate the financial soundness of the two largest Sharia Banks in Indonesia: 1) Bank Sharia Mandiri (BSM) and 2) Bank Muamalat Indonesia (BMI) for the periods of 2014 -2018. The results of investigating of selected financial ratios: 1) Capital Adequacy Ratio (CAR), 2) NonPerforming Financing Ratio (NPF), 3) Cost Income Ratio (BOPO), 4) Return on Asset (ROA), 5) Financing Deposit Ratio (FDR), and then the result is compared with the performance of the two largest Conventional Banks: Bank Rakyat Indonesia (BRI) and Bank Central Asia (BCA) to conclude the weakness points of BSM and BMI. The result shows that the performances of BSM and BMI were far below the two largest Conventional Banks, BRI and BCA. The main drivers of the low performances were limited Capital, high NPF, high BOPO which at the end resulted low Return on Assets (ROA) of BSM and BMI.

Item Type: Article
Subjects: H Social Sciences > HG Finance
Divisions: Research And Community Empowerment > Journals
Depositing User: Dr. Wiwiek Mardawiyah Daryanto
Date Deposited: 17 Nov 2020 08:42
Last Modified: 18 Nov 2020 03:43
URI: http://repository.ipmi.ac.id/id/eprint/942

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