INDONESIA - ARTICLES - Banking: According to Islamic Sharia Concepts and Its Performance in Indonesia

 Banking: According to Islamic Sharia Concepts and Its Performance in Indonesia
Hariandy Hasbi and Tendi Haruman

International Review of Business Research Papers
Vol. 7. No. 1. January 2011. Pp. 60 - 76

This study investigates empirically Islamic Sharia Banking concepts and to determine the performance of its based on Bank Indonesia Act No.9/1/PBI/2007 on assesment system for performance level to Commercial Banks based on Islamic Principles which consists of the aspects: capital, assets, management, earning, and likuidity which called CAMEL. The all of aspects use financial ratios as follow CAR, ROA, NPF, OEOI, FDR and Depositor Funds as a comparison as a reflect level of public trust on Islamic banking. Samples were taken from Bank Indonesia as a central bank period of 2007-2009 with 31 sample of Islamic Bank (BUS, UUS, BPRS) which was chosen based on a purposive sampling method. Using descriptive method and multiple regression analysis, the results of this study indicate that the Islamic banking have a good performance reflected CAMEL on Depositor Funds. (source)

INDONESIA - ARTICLES - Performance Analysis of Indonesian Islamic and Conventional Banks

Performance Analysis of Indonesian Islamic and Conventional Banks

Viverita

University of Indonesia (UI) - Graduate School of Management, Faculty of Economics

Abstract:     
The sharia banking phenomenon get higher attention for the last two decades, and received special attention by the banking industry. In sharia banking, interest-based principal is not allowed; instead, profit-and-loss-sharing is applied. In Indonesia, the practice of sharia-based banking system is based on the Banking Act No. 7 May 1992. This Act provides Islamic banks freedom to develop their own strategy to generate income, either in the form of profit sharing or through the interest. Although there was only one Islamic bank operated at the time the Government passed the law, the number has been continue to growing since then. This study aims to answer the question on the performance of Indonesian Islamic banks’ during the latest four-year period using individual-bank data. In addition, this study also attempts to compare the performance of Islamic and conventional banks. Using three financial efficiency ratios, (i.e. cost efficiency ratios, revenue efficiency ratios and profit efficiency ratios), it is found that there is a significant performance improvement of Islamic banks due to costs and revenue efficiency. T-test and F-test are used to check significance difference of Islamic and conventional banks. Results from the study show that Islamic banks experienced higher cost efficiency (CITR and NIER) than that of conventional banks. In addition, Islamic banks also appear to be able to generate more revenue and profit efficient than those of conventional banks. This indicates that Islamic banks are able to generate more revenue and profit than conventional banks, although they have less experience than conventional banks. Furthermore, big Islamic banks have also higher value of revenue efficiency (NIM) and profit efficiency ratios (ROAA and ROAE) than big conventional banks.(source)